RBI Governor Shaktikanta Das on Friday warned banks and NBFCs against charging excessive fees and over-the-top interest rates on loans to customers. The Governor was speaking to reporters after the monetary policy committee meeting and red-flagged that some of them deviated from the prescribed rules in the Key Facts Statement.
"Some banks and NBFCs still levy undisclosed charges, as against the mandated guidelines," said the Governor. He also flagged the high interest rates which some of the micro-finance entities and NBFCs were charging on small-value loans, which he said could be exploitative.
While acknowledging the breathing space that regulation provides the financial entities, Das impressed upon the fact that responsible pricing was needed for fairness and transparency. His assurance was that the RBI was fully engaged with these institutions to protect the interests of the consumers and the stability of the financial system.
Das also reminded that in the past, the RBI has flagged the increasing number of unsecured retail loans and the rising over-dependence of NBFCs on bank funding. While data from the latest financial stability report shows a marginal moderation in those kinds of loans, Das said that the RBI would continue to be vigilant and take further measures if required.
He asked the boards and senior management of banks and NBFCs to manage the risks more prudentially within the frameworks that they have established. He also asked banks to relook at their business strategies given that credit and deposit growth rates have persisted in a disproportionate manner and emphasized that the approach to asset and liability management has to be balanced.
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