RBI dy guv urges banks to prudently lend to NBFCs

In Nov, RBI hiked risk weights on bank loans to NBFCs and on unsecured loans that banks and NBFCs disburse

- Shayan Ghosh

Banks need to reconsider whether they want to be part of lending consortiums to non-bank financiers that have scores of other lenders – up to 40 at times – to improve their monitoring of borrowers' use of sanctioned loans, RBI deputy governor Swaminathan J said.

"By regulation if I say that a non-banking financial company (NBFC) should not borrow from more than 10 banks, it will be very prescriptive and restrictive and that is not something which will solve the problem. Lenders as a group should take a call on what should be the way going forward so that they have good underwriting standards as well as good post-sanction monitoring," Swaminathan said at SBI’s banking and economics conclave.