YV Reddy, governor of RBI, along with deputy governor V Leeladhar, met the Finance Industry Development Council (FIDC), a representative body of NBFCs, to work out a three-year perspective for the sector.
Dr Reddy stressed the need for further strengthening the NBFCs as they are an important component of the service sector, which was a significant contributor to the growth of the economy.
It was important for the NBFCs to efficiently intermediate and enhance creditor delivery to the dispersed, underbanked and underserviced sections of the economy.
However, it is also the RBIs responsibility to protect the depositors interest. Dr Reddy clarified that while ensuring that the public deposit taking companies were well regulated, the central bank was looking at further strengthening the NBFC sector, so as to help the sector grow in terms of its asset base.
The governor clarified that the RBI had given an option to the NBFCs to voluntarily move out of public deposits acceptance activity if they found the regulatory costs outweighed their benefits.
In case an NBFC voluntarily chose to get out of public deposits, the RBI would, in fact, help the NBFC in its efforts, including imparting training and technology support, Dr Reddy assured the NBFC representative body. The representatives mentioned that they should have a level-playing field with housing finance companies in matters of funding from banks and access to refinancing institutions, such as Sidbi or Nabard.
Easy access to bank finance as well as refinance would also help reduce our dependence on public deposits, remarked the NBFC representatives. Apart from discussing rationalisation of a number of regulations, deposit insurance and rating of NBFCs, the representative further urged that provisions of Debt Recovery Tribunal Act and the Sarfaesi Act which are available to banks, be extended to housing finance companies also.