The Reserve Bank of India on Wednesday flagged the rising connectivity between the non-banking financial companies and the banks. Governor Shaktikanta Das emphasized that banks must evaluate their exposure constantly to Non-Bank Financial Companies and exposure of individual NBFCs to multiple banks. RBI suggested that Non-Bank Financial Companies should aim for broad-basis funding sources and must ensure that they are not overdependent on banks for funding. RBI Governor Shaktikanta Das flagged contagion risks with high exposure of banks to NBFCs. Since Das added that banks and NBFCs should keep assessing their asset-liabilities management, both banks and NBFCs have become concerned. If you are scrambling to the web regarding the same, the following sections are waiting for you. Scroll down the page.
NBFCs high dependance on bank funding may form contagion risk
RBI Governor Shaktikanta Das was at FIBAC 2023 where he added in his speech, “Given the increasing importance of NBFCs (Non-Banking Financial Companies), the increasing interconnectivity between banks and non-banks merits close attention. NBFCs are large net borrowers of funds with exposure from banks being the highest,” Das further added that such concentrated connectivities may create ‘contagion risks’ Meanwhile, he emphasized that the Non-Bank Financial Companies should be focused on broad basing funding sources along with reducing overdependence on banks for funding. Continue reading this article and go through this page till the end.
According to the RBI Governor, banks and non-bank financial companies are required to take care of credit growth and ensure that credit growth is sustainable. The governor further added that all forms of exuberance required to be avoided. Das said, “Banks and NBFCs need to strengthen asset-liability management,” He also talked about the risks that emerge from time to time. Later, he went on to emphasize the new opportunities of which banks and NBFCs should take advantage. Take a look at the next section and read more details.
The governor of the Reserve Bank of India, Shaktikanta Das says, “New risks are emerging from time to time, new sources of risks are also coming up. New opportunities are also knocking on the doors, it is for us to take advantage of them. International confidence in India’s prospects is at an all-time high.” He further said that financial stability is the backbone of India’s growth. In addition, stability in price also impacts various factors including financial stability. Stay tuned to this website for more details and further updates.