Non-banks must watch P2P lending practices: RBI

Non-banking finance N companies (NBFCs) should be mindful of poor underwriting standards and risks from increased lending exposure to only one segment, said Reserve Bank of India Deputy Governor Rajeshwar Rao.

- Gopika Gopakumar

In a speech delivered at an event organized by the Confederation of Indian Industries (CII), Rao also cautioned NBFCs against peer-to-peer (P2P) lending practices, which are not in line with regulatory guidelines.

"NBFC-P2Ps have been observed to underplay the risks through various means such as promising high/ assured returns, structuring the transactions, providing anytime fund recall facilities, etc. Let me make it clear that any breach of licencing conditions and regulatory guidelines is non-acceptable," he added.

Rao said NBFCs should focus on maintaining the quality of their loan portfolio.