RBI still assessing revolving credit norms: Sanjay Malhotra
Reserve Bank of India governor Sanjay Malhotra has indicated that regulations on revolving credit by non-banking finance companies are under review. The RBI issued draft norms limiting NBFCs to term loans without revolving credit options. Malhotra said that systemic risks linked to these changes will be thoroughly evaluated before reaching a decision.
Reserve Bank of India (RBI) governor Sanjay Malhotra stated that revolving credit products currently provided by non banking finance companies (NBFCs) were not previously regulated, but the suggested changes are still being evaluated. Malhotra affirmed this during a post policy press conference. He explained that the surplus liquidity in the banking system will not negatively impact the asset quality of NBFCs.
The draft framework on revolving credit is merely a clarification, as NBFCs have been previously directed against offering such services. However, due to technological advancements, NBFCs are now providing term loans as revolving credit. Malhotra acknowledged receiving feedback from stakeholders and stated that the RBI will form a new opinion on the issue before issuing final instructions. He expressed concern about the potential systemic risk that this change could pose.
Written by urgent.news from The Economic Times - Economy's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
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