RBI is closely monitoring NBFC sector: Shaktikanta Das1 min read . Updated: 07 Nov 2019, 05:22 PM IST
- RBI is regularly interacting with the management of these companies to take corrective steps
- The governor attended a review meeting on Financial Stability and Development Council held at the ministry of finance today
The Reserve Bank of India (RBI) is closely monitoring non-banking financial companies (NBFCs), and is regularly interacting with the management of these companies to take corrective steps as and when required, governor Shaktikanta Das said on Thursday.
“RBI is monitoring top 50 NBFCs, which account for 75% of the sector. We are having regular interaction with the management of NBFCs and asking them to take corrective steps as per market mechanism. RBI has a broad and good sense of what’s happening in the sector," Das told reporters at North Block.
India’s shadow banking system has been struggling with liquidity pressures after payment defaults by group companies of Infrastructure and Leasing Financial Services Ltd (IL&FS) last year. Banks and mutual funds reduced lending to NBFCs and housing finance companies, creating a cash crunch and forcing the non-banks to sell assets and cut back on new loans.
Das also said the regulator was closely watching the situation at Punjab and Maharashtra Co-operative Bank Ltd (PMC) and that a forensic audit of the bank was underway.
PMC Bank has allegedly enabled financial frauds amounting to Rs.6,500 crore by promoters of Housing Development Infrastructure Ltd (HDIL), putting thousands of depositors and their money at risk. More than two-third of the bank’s total loan book has an exposure to HDIL.
The governor attended a review meeting of the Financial Stability and Development Council (FSDC) held at the ministry of finance today. Finance minister Nirmala Sitharaman chaired the meeting and reviewed the state of economy including stress in the financial sector.
“The meeting was very constructive and it took stock of entire financial system and other issues," PTI said, quoting finance secretary Rajiv Kumar who spoke after the FSDC meeting that lasted nearly two hours.
The FSDC is the apex body of sectoral regulators, headed by the finance minister.