Latest news with #NBFCSymposium2025
Business Standard
10-07-2025
- Business
- Business Standard
Gross loan advances by Non-Banking Financial Companies have doubled over last four years says FM
Union Finance Minister Nirmala Sitharaman has highlighted that the loan recovery practices of Non-Banking Financial Companies (NBFCs) must be conducted in a fair, empathetic and respectful manner, as well as strictly aligning with the RBIs Fair Practices Code. FM stated this while addressing the NBFC Symposium 2025 in New Delhi. The Minister said that financial inclusion cannot be used as a pretext for financial exploitation. She added that lending should be based on the genuine needs and repayment capacity of customers. The Minister also underscored the need for NBFCs to integrate governance, risk management, and customer protection as part of their core beliefs and ethics. Finance Minister Nirmala Sitharaman revealed that gross loan advances by Non-Banking Financial Companies (NBFCs) have doubled over the last four years, surging from Rs 24 lakh crore in March 2021 to Rs 48 lakh crore as of March 2025. The finance minister emphasized the growing significance of NBFCs in Indias financial landscape, particularly in serving segments historically excluded from formal credit systems.
The Print
10-07-2025
- Business
- The Print
Don't aggressively push loans, keep interest rates reasonable: FM to NBFCs
Addressing an NBFC Symposium 2025 here, Sitharaman said there should be deep collaboration between NBFCs and banks, especially through co-lending arrangements for providing loans to the priority sector. She also asked non-banking financial companies (NBFCs) to adhere to the Reserve Bank of India's loan recovery norms strictly, and keep interest rates at reasonable levels. New Delhi, Jul 9 (PTI) Finance Minister Nirmala Sitharaman on Wednesday asked NBFCs not to aggressively market or push loans to customers and said financial inclusion cannot be used as a pretext for 'financial exploitation'. 'Financial inclusion cannot be used as a pretext for financial exploitation,' she said, adding that the lending should be based on the genuine needs and repayment capacity of customers. Loans should not be aggressively marketed or pushed onto individuals, the minister said, stressing that the recovery process should be fair, empathetic and in a respectful manner, in strict accordance with the RBI's Fair Practices Code. '…it (loan recovery) is part of your duty, but it's not part of your duty to be heartless… So the same message is that the push for growth should not come at the expense of customer wellbeing. Let's be clear on that,' she told NBFCs, which are about 9,000 in numbers. The minister further said as the NBFC model matures, the focus on risk management should increase. Risk-taking, Sitharaman told NBFCs, must be well-planned and data-driven, and never beyond the absorption capacity of the entity concerned. Sitharaman emphasised that liquidity and credit risks must be rigorously assessed and managed, while robust internal controls should ensure oversight on asset-liability mismatches, nature and tenor of the funding sources, and concentration risks. A sustainable business model must be the cornerstone of the sector's growth, and at the heart of a sustainable credit landscape lies a financially aware and literate customer, she said. Loan book of NBFCs has doubled to Rs 48 lakh crore in March 2025 in the past four years from Rs 24 lakh crore. They currently account for about 24 per cent of the volume of credit disbursed by commercial banks and the aim should be to reach 50 per cent, she said. 'NBFCs are no longer 'shadow banks' — their stronger regulation and oversight is the best testimony of their importance in the financial system and the broader economy,' Sitharaman added. Sitharman, who also holds the portfolio of Corporate Affairs Ministry, said as India moves forward, NBFCs will have a key role in meeting the credit needs of the future, including in areas like green initiatives, affordable housing, and MSMEs. She said the reach of NBFCs is their biggest strength. 'By 2047, at least 50 per cent of NBFC credit should be directed towards high-growth, high-impact sectors,' she said. NBFCs' fundamentals have been underpinned by strong capital buffers, robust interest margins and earnings and low levels of impairment, Sitharaman said. Recent regulatory measures such as the restoration of risk weights on bank lending and the easing of financial conditions are expected to further improve credit prospects, strengthening the overall funding environment for the sector, the finance minister said. 'With the recent RBI measures reducing the costs of funds to the sector, urge NBFCs to pass on the benefits of this reduction onto customers,' she said, adding that the government remains committed to supporting the NBFC sector by enabling a responsive policy environment. 'Want to assure the industry that we are committed to a consultative approach, and the issues flagged in the consultations with NBFCs will be examined with due attention,' Sitharaman said. NBFCs' asset quality has shown steady recovery since the pandemic, with the sector's gross NPAs having steadily declined from 6.4 per cent in March 2021 to reach the current level of 3 per cent in March 2025. Profitability has also improved with return on assets improving from 1.11 per cent in March 2021 to 2.4 per cent in March 2025. PTI NKD TRB This report is auto-generated from PTI news service. ThePrint holds no responsibility for its content.
India Gazette
10-07-2025
- Business
- India Gazette
Loan recovery practices of NBFCs must be fair, respectful: FM Sitharaman
New Delhi [India], July 10 (ANI): Union Finance Minister Nirmala Sitharaman emphasized that the loan recovery practices of Non-Banking Financial Companies (NBFCs) must be fair, respectful, and empathetic, and must strictly align with the Reserve Bank of India's (RBI) Fair Practices Code. Speaking at the NBFC Symposium 2025 held in New Delhi on Wednesday, the minister urged NBFCs to avoid harsh recovery measures, especially in cases involving small loan amounts, and reminded them of the importance of customer dignity. 'Recovery practices of NBFCs must be fair, empathetic and respectful, in strict accordance with the RBI's Fair Practices Code,' Sitharaman said. She noted that sometimes media reports highlight harsh recovery actions taken for very small loan amounts like Rs 500. 'Sensationalized reporting in the media, which they are right in reporting. I don't fault the media at all on this. Where harsh measures are taken for recovery of a 500 rupee. heartbreaking stories come out,' she said. The minister added, 'I know for you it's important and it's part of your duty, but it's not part of your duty to be heartless. You need to have better Fair Practices Code, aligning with RBI's Fair Practices Code. So the same message, the push for growth should not come at the expense of customer well-being.' She also raised an important issue regarding the role NBFCs can play in supporting the banking sector's priority sector lending goals. The minister pointed out that every year, a substantial amount of funds allocated for priority sector lending by banks remains unutilized. These unutilized funds are then transferred to institutions like NABARD and SIDBI. 'In the last few years, I have been closely monitoring how public priority sector lending activities of the banks are going on. Every year you have substantial amount left behind, which then gets refilled to NABARDs of the world and SIDBIs of the world,' Sitharaman said. She questioned the logic behind returning these funds to financial institutions when they could be disbursed to the people who need them on the ground. 'Collectively, if you put together all the public sector banks, they have a certain number of branches all over the country. NABARD has far less than that. What's the logic? Why should the priority sector lending money be coming back to the secretary? It should be in the ground with the people for whom it was meant,' she added. The minister proposed that NBFCs, which often operate at the last mile, could be co-opted by banks as partners to improve the priority sector lending performance. 'Is there a role that you can actively play through the NBFCs? You and the NBFCs together. Because they are there at the last mile. Can the priority sector lending performance of the banks be improved if you co-opt the NBFCs as your partners in this?' she said. Sitharaman also invited the Reserve Bank of India to offer guidance on how this partnership could be achieved without disrupting prudential norms. She pointed out that the delay in disbursement, when funds return to NABARD or SIDBI and then are re-issued, causes a loss of six to eight months. 'Why should the customer at the end of the day, for whom the government is making this apportionment through the budget, not receive it that year itself?' she questioned. She concluded by stating that the presence of NBFCs should be more effectively used by public sector banks to ensure timely and targeted credit delivery to the intended beneficiaries. (ANI)
Time of India
10-07-2025
- Business
- Time of India
Loan recovery practices of NBFCs must be fair, respectful: FM Nirmala Sitharaman
Union Finance Minister Nirmala Sitharaman emphasized that the loan recovery practices of Non-Banking Financial Companies (NBFCs) must be fair, respectful, and empathetic, and must strictly align with the Reserve Bank of India's (RBI) Fair Practices Code. Speaking at the NBFC Symposium 2025 held in New Delhi on Wednesday, the minister urged NBFCs to avoid harsh recovery measures, especially in cases involving small loan amounts, and reminded them of the importance of customer dignity. "Recovery practices of NBFCs must be fair, empathetic and respectful, in strict accordance with the RBI's Fair Practices Code," Sitharaman said. by Taboola by Taboola Sponsored Links Sponsored Links Promoted Links Promoted Links You May Like Dukung Orang Terkasih Menghadapi Limfoma: Mulai Di Sini Limfoma Klik Di Sini Undo She noted that sometimes media reports highlight harsh recovery actions taken for very small loan amounts like Rs 500. "Sensationalized reporting in the media, which they are right in reporting. I don't fault the media at all on this. Where harsh measures are taken for recovery of a 500 rupee. heartbreaking stories come out," she said. Live Events The minister added, "I know for you it's important and it's part of your duty, but it's not part of your duty to be heartless. You need to have better Fair Practices Code, aligning with RBI's Fair Practices Code. So the same message, the push for growth should not come at the expense of customer well-being." She also raised an important issue regarding the role NBFCs can play in supporting the banking sector's priority sector lending goals. The minister pointed out that every year, a substantial amount of funds allocated for priority sector lending by banks remains unutilized. These unutilized funds are then transferred to institutions like NABARD and SIDBI. "In the last few years, I have been closely monitoring how public priority sector lending activities of the banks are going on. Every year you have substantial amount left behind, which then gets refilled to NABARDs of the world and SIDBIs of the world," Sitharaman said. She questioned the logic behind returning these funds to financial institutions when they could be disbursed to the people who need them on the ground. "Collectively, if you put together all the public sector banks, they have a certain number of branches all over the country. NABARD has far less than that. What's the logic? Why should the priority sector lending money be coming back to the secretary? It should be in the ground with the people for whom it was meant," she added. The minister proposed that NBFCs, which often operate at the last mile, could be co-opted by banks as partners to improve the priority sector lending performance. "Is there a role that you can actively play through the NBFCs? You and the NBFCs together. Because they are there at the last mile. Can the priority sector lending performance of the banks be improved if you co-opt the NBFCs as your partners in this?" she said. Sitharaman also invited the Reserve Bank of India to offer guidance on how this partnership could be achieved without disrupting prudential norms. She pointed out that the delay in disbursement, when funds return to NABARD or SIDBI and then are re-issued, causes a loss of six to eight months. "Why should the customer at the end of the day, for whom the government is making this apportionment through the budget, not receive it that year itself?" she questioned. She concluded by stating that the presence of NBFCs should be more effectively used by public sector banks to ensure timely and targeted credit delivery to the intended beneficiaries.
Time of India
09-07-2025
- Business
- Time of India
Don't aggressively push loans, keep interest rates reasonable: FM Nirmala Sitharaman to NBFCs
Finance Minister Nirmala Sitharaman on Wednesday asked NBFCs not to aggressively market or push loans to customers and said financial inclusion cannot be used as a pretext for "financial exploitation". She also asked non-banking financial companies (NBFCs) to adhere to the Reserve Bank of India 's loan recovery norms strictly, and keep interest rates at reasonable levels. Addressing an NBFC Symposium 2025 here, Sitharaman said there should be deep collaboration between NBFCs and banks, especially through co-lending arrangements for providing loans to the priority sector. "Financial inclusion cannot be used as a pretext for financial exploitation," she said, adding that the lending should be based on the genuine needs and repayment capacity of customers. Loans should not be aggressively marketed or pushed onto individuals, the minister said, stressing that the recovery process should be fair, empathetic and in a respectful manner, in strict accordance with the RBI's Fair Practices Code. Live Events "...it (loan recovery) is part of your duty, but it's not part of your duty to be heartless... So the same message is that the push for growth should not come at the expense of customer wellbeing. Let's be clear on that," she told NBFCs, which are about 9,000 in numbers. The minister further said as the NBFC model matures, the focus on risk management should increase. Risk-taking, Sitharaman told NBFCs, must be well-planned and data-driven, and never beyond the absorption capacity of the entity concerned. Sitharaman emphasised that liquidity and credit risks must be rigorously assessed and managed, while robust internal controls should ensure oversight on asset-liability mismatches, nature and tenor of the funding sources, and concentration risks. A sustainable business model must be the cornerstone of the sector's growth, and at the heart of a sustainable credit landscape lies a financially aware and literate customer, she said. Loan book of NBFCs has doubled to Rs 48 lakh crore in March 2025 in the past four years from Rs 24 lakh crore. They currently account for about 24 per cent of the volume of credit disbursed by commercial banks and the aim should be to reach 50 per cent, she said. "NBFCs are no longer 'shadow banks' -- their stronger regulation and oversight is the best testimony of their importance in the financial system and the broader economy," Sitharaman added. Sitharman, who also holds the portfolio of Corporate Affairs Ministry, said as India moves forward, NBFCs will have a key role in meeting the credit needs of the future, including in areas like green initiatives, affordable housing, and MSMEs. She said the reach of NBFCs is their biggest strength. "By 2047, at least 50 per cent of NBFC credit should be directed towards high-growth, high-impact sectors," she said. NBFCs' fundamentals have been underpinned by strong capital buffers, robust interest margins and earnings and low levels of impairment, Sitharaman said. Recent regulatory measures such as the restoration of risk weights on bank lending and the easing of financial conditions are expected to further improve credit prospects, strengthening the overall funding environment for the sector, the finance minister said. "With the recent RBI measures reducing the costs of funds to the sector, urge NBFCs to pass on the benefits of this reduction onto customers," she said, adding that the government remains committed to supporting the NBFC sector by enabling a responsive policy environment. "Want to assure the industry that we are committed to a consultative approach, and the issues flagged in the consultations with NBFCs will be examined with due attention," Sitharaman said. NBFCs' asset quality has shown steady recovery since the pandemic, with the sector's gross NPAs having steadily declined from 6.4 per cent in March 2021 to reach the current level of 3 per cent in March 2025. Profitability has also improved with return on assets improving from 1.11 per cent in March 2021 to 2.4 per cent in March 2025.
