The Reserve Bank of India (RBI) Governor Shaktikanta Das has said that the central bank is giving a fresh look at the regulatory and the supervisory framework of the Non-banking Financial Companies (NBFCs).
The central bank has recently released the draft guidelines for a robust liquidity framework for the NBFCs. To sustain the improvements in a credit culture, the RBI has issued new guidelines for the resolution of stressed assets.
“We are giving a fresh look at the regulatory and the supervisory framework of NBFCs. It is our endeavor to have an optimal level of regulation and supervision so that the NBFC sector is financially resilient and robust, ” Das said in a lecture delivered at the Lal Bahadur Shastri National Academy of Administration, Mussoorie.
The Reserve Bank will continue to monitor the activity and performance of this sector with a focus on major entities and their inter-linkages with other sectors. The Reserve Bank will not hesitate to take any required steps to maintain financial stability, he added.
Das also said that the RBI is taking a number of steps to improve the commercial viability of Urban Co-operative Banks (UCBs). These steps include the proposed establishment of an Umbrella Organisation and a Centralised Fraud Registry for UCBs and governance reforms at the board level.
The RBI is also encouraging voluntary mergers and consolidation in the sector to help reduce operating costs, diversify risks, and economies’ on capital.
“Post global the financial crisis, it has been recognized that the price stability may not be sufficient for financial stability, and therefore, financial stability has emerged as another key consideration for monetary policy, though the jury is still out as to whether it should be added as an explicit objective of monetary policy,” Das said
“The fact remains that though the focus of the monetary policy is mainly on inflation and growth, the underlying theme has always been financial stability,” he added.