India central bank planning more measures for non-banking financial firms

[MUMBAI] The Reserve Bank of India is considering more measures for non-banking financial companies (NBFCs), including more oversight and bringing state-owned firms under central bank supervision, Deputy Governor R Gandhi said in a speech on Sunday.

Other measures being considered include a review of regulations of NBFCs within the microfinance sector and a system for tackling customer complaints for these shadow lenders, Mr Gandhi added.

He did not spell out the measures in depth. Earlier this month, the RBI announced new rules for the NBFC sector in a bid to regulate them more like traditional banks.

Mr Gandhi, in a speech uploaded to the RBI's website on Monday, called those rules "the first step towards a vibrant, professionally managed and healthy NBFC sector." "Much needs to be done and there is work already in progress," he said.

Mr Gandhi also said India needs to do more to tackle companies or financial products that do not clearly fall under a regulator's purview, including those taking deposits without having registered with the central bank.

He said solutions could include the creation of a specific regulator to look after these firms or products, including potentially giving the responsibility to state governments.

The comments reflect the central bank's continued concerns about firms, including unregulated "chit" or small investment funds that serve hundreds of millions of villagers and small businesses.

REUTERS