De-registration of small NBFCs will hurt financial inclusion: Finmin
FIDC has already sent their representation on the draft guidelines to the RBI earlier this month.
“This (de-registration of NBFCs) shall take us back to the pre-1997 era of unregulated entities engaged in financial activities, which could once again encourage mushrooming growth of such high-risk entities. It is perhaps a one-of-its-kind scenario where the smaller players want to be registered and regulated, but the regulator wants them to be outside the ambit of regulation," said Raman Aggarwal, director (member managing committee), FIDC.
He said small NBFCs, once de-registered, shall be denied bank lending, because one of the requirements of banks is that the NBFC should be registered. As a consequence, the most likely source of funding for such NBFCs would be public deposits, which in itself may cause more problems, he said.
Besides, deregistration will also cause more complications for NBFCs. According to a panel set up by the ministry of road transport and highways, in case of vehicles financed, the lien in the vehicle registration certificate shall be marked only in favour of banks and registered NBFCs, Aggarwal pointed out.
Further, police, courts and tax departments demand RBI registration certificate as a
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