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RBI's New NBFC Framework to Boost Growth, Strengthen Sector: Expert

An expert states that the RBI's proposed regulatory framework for NBFCs, featuring a new classification system, will strengthen the sector through enhanced oversight and clarity. The central bank's concurrent focus on economic growth is expected to further support this momentum. New guidelines for gold loans aim to promote responsible lending practices and improve credit access. The MSME sector remains a critical growth driver, contributing significantly to exports and employment.

Key Points: RBI NBFC Framework & Growth Focus to Strengthen Sector

  • RBI's new NBFC classification into layers
  • Enhanced regulatory clarity & oversight
  • Stricter gold loan guidelines for responsible lending
  • MSME sector's critical role in exports & employment
  • Expected 16-18% growth for lender's SME portfolio
2 min read

RBI's focus on growth, new NBFC framework to strengthen sector: Expert

RBI's new NBFC classification & focus on economic growth will bring regulatory clarity and strengthen the financial sector, says Capri Global MD.

"The Reserve Bank of India has consistently prioritised economic expansion, and the upcoming framework is likely to further strengthen growth momentum - Rajesh Sharma"

Mumbai, April 9

The Reserve Bank of India's continued focus on boosting economic growth, along with its proposed regulatory changes for non-banking financial companies, is expected to bring greater strength and clarity to the sector, Rajesh Sharma, Managing Director of Capri Global Capital Limited said on Thursday.

In an interaction with IANS, Sharma said that the RBI's regulatory frameworks have historically brought transparency and stability, and the proposed changes for NBFCs are no exception.

"Such initiatives by the central bank help improve compliance standards while supporting overall sectoral growth," he said.

"The Reserve Bank of India has consistently prioritised economic expansion, and the upcoming framework is likely to further strengthen growth momentum while ensuring better regulatory oversight," he stated.

Following the RBI's Monetary Policy Committee (MPC) decision earlier this week, Governor Sanjay Malhotra had indicated that the central bank is working on a revised classification system for NBFCs, with an announcement expected soon.

Under the proposed structure, NBFCs will be categorised into upper, middle and other layers to enhance regulatory clarity and supervision.

Commenting on the RBI's recent directions on gold loans, Sharma said the guidelines aim to ensure more responsible lending practices.

"These include stricter income assessment, increased focus on priority sector lending, and repayment-linked loan approvals," Sharma explained.

He added that the broader objective is to make credit more accessible at lower interest rates for common borrowers, reducing their reliance on informal moneylenders charging high rates.

On the micro, small and medium enterprises (MSME) sector, Sharma highlighted its critical role in the economy, noting that SMEs contribute nearly 37 per cent to India's exports and are among the largest generators of employment.

He said that lending to small businesses directly contributes to economic growth and remains a key focus area for both policymakers and financial institutions.

Sharma further said that SMEs currently account for around 20 per cent of Capri Global Capital's assets under management (AUM).

He expressed confidence that the segment will continue to drive growth, adding that the company expects to sustain its 16-18 per cent growth trajectory in the coming years, supported largely by the SME portfolio.

- IANS

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Reader Comments

P
Priya S
Good to see RBI's continued focus. The gold loan guidelines are much needed to stop exploitation. So many families in my area get trapped by local moneylenders. Formal, regulated credit is the way forward.
R
Rohit P
While the intent is good, I hope the "layered" classification doesn't become too bureaucratic and slow down lending. Sometimes over-regulation stifles the very growth it aims to protect. The proof will be in the implementation.
S
Sarah B
Interesting read. The 37% export contribution from SMEs is a staggering figure. Strengthening this sector through better finance is key for India's global trade ambitions. Clarity for NBFCs should help channel more funds their way.
V
Vikram M
Transparency and stability are the bedrock of a healthy financial system. RBI has done a decent job post the IL&FS crisis. Categorising NBFCs into layers based on risk makes perfect sense. Jai Hind!
K
Kavya N
As someone who runs a small packaging unit, access to timely and affordable credit is our biggest challenge. If these changes mean banks and NBFCs can lend to us more easily, it will be a game-changer for millions of small entrepreneurs.

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