RBI Governor Sanjay Malhotra to NBFCs: Strengthen grievance redressal mechanism, embrace ULI

RBI Governor Sanjay Malhotra on Thursday asked Non-Banking Financial Companies (NBFCs) to ensure fair treatment of customers and strengthen grievance redress mechanisms. Malhotra also acknowledged the crucial role played by these institutions in providing credit to small businesses and niche segments, the RBI said in a statement.

"He also underscored the significance of ensuring fair treatment to customers and putting in place a prompt grievance redress mechanism," the RBI said.

Malhotra made these remarks during a meeting with Managing Directors and Chief Executive Officers of select NBFCs, including government-owned entities, housing finance companies, and microfinance institutions.

The RBI governor underscored the need to balance growth aspirations with sound business practices to ensure customer protection and financial stability, the Reserve Bank of India said in a statement.

He urged NBFCs to actively participate in the Unified Lending Interface (ULI) being developed by the central bank to enhance financial inclusion.

These NBFCs constitute nearly 50% of the total assets of the NBFC sector.

The meeting, held in Mumbai, saw participation from self-regulatory organisations Sa-Dhan and Micro Finance Institutions Network (MFIN), as well as the Finance Industry Development Council (FIDC).

Deputy Governors M. Rajeshwar Rao, T. Rabi Sankar, and Swaminathan J., along with senior RBI officials handling regulation, supervision, and financial inclusion also attended the meeting.

During the interactive session, industry representatives shared feedback on sectoral challenges, ongoing initiatives, and their expectations from the central bank. The meeting was part of RBI’s ongoing engagement with the senior management of regulated entities, with the last such interaction held in August 2023.