RBI Highlights NBFCs' High Dependence on Banks

Urged NBFCs to diversify funding sources to mitigate concentration risks

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The Reserve Bank of India (RBI) has highlighted the need for Non-Banking Financial Companies (NBFCs) to diversify their sources of funding as a key risk mitigation strategy.

In its latest report, the RBI noted that while the dependency of NBFCs on banks has moderated slightly, it remains significantly high.

It said "The dependence of NBFCs on banks remains high, notwithstanding some moderation; NBFCs need to further diversify their sources of funds as a risk mitigation strategy".

The report emphasized that NBFCs must broaden their funding sources to reduce concentration risks.