NBFC GUIDELINES
Digital loans up 49% in FY24 by value, Rs 1.46 lakh cr disbursed: Industry body
The digital lending sector, represented by FACE, saw a significant increase in disbursements and loan numbers in FY23-24, with member entities disbursing Rs 1.46 lakh crore, marking a 49% surge. Over 10 crore loans were issued, up 35% from the previous year. Despite regulatory concerns, the sector emphasizes customer-centricity, compliance, and sustainable practices.
HDB Financial awaits parent’s approval to begin IPO journey
HDB Financial Services, the non-banking financing arm of HDFC Bank, is preparing for an IPO to list by September 2025 with a valuation range of $9 billion to $12 billion. The lender plans to open 200 branches this fiscal year to expand its loan book.
100% sure new RBI guideline on gold financing is not going to impact our volumes: Muthoot Finance
George Alexander Muthoot affirms Muthoot Finance's readiness for the RBI's directive, ensuring seamless transitions to bank transfers for loans exceeding Rs 20,000. Compliance remains a key focus in the NBFC sector, with vigilance against non-compliant lenders. Muthoot says: Nobody is going anywhere because the customer will not get cash elsewhere. All NBFCs are the same way."
Muthoot Finance raises $650 million via offshore dollar bonds
The non-banking financial company raised the funds through bonds maturing in three years and nine months at a coupon rate – or rate of interest – of 7.125%. The funds will be used for onward lending and other activities that are allowed under the Reserve Bank of India’s external commercial borrowing guidelines.
Govt evaluating RBI proposal for higher infrastructure provisioning; bankers, NBFCs voice concern
Lenders may oppose the draft rules, which proposes provisioning of up to 5% from current 0.4%, due to concerns over rising interest rates and potential disruption to capital expenditure. Banks plan to lobby against the steep increase, arguing it could affect project viability and economic momentum. State-owned NBFCs and infrastructure firms are also raising concerns, emphasizing the need to balance risk and support for infrastructure financing.
PFC seeks legal view on Shapoorji Pallonji promoters' Rs 15,000 crore loan ask
State-owned Power Finance Corp (PFC) is seeking legal counsel regarding the approval of a ₹15,000 crore loan to the promoters of the Shapoorji Pallonji (SP) Group, leveraging their 18.37% shareholding in Tata Sons as collateral. Earlier this year, the Mistry family, who are the promoters, proposed obtaining funds from the lender based on cash flows from their real estate business and their Tata Sons shares.
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4 ways banks are overcharging borrowers on loan interest rates, as per RBI
Date for interest charging by banks: The Reserve Bank of India did onsite review of banks and other financial institutions to check how lenders are charging interest on loans issued to borrowers. The central bank found four instances where banks were following unfair lending practices. Read on to know more about this and what RBI has asked banks to do.
Will new RBI's guidelines make them Universal and get re-rated ? 4 small finance banks with upside potential of up to 24%
While they have been in work for quite some time, yesterday, RBI released the guidelines for small finance banks to turn themselves into universal banks. While most of the guidelines are not something these banks cannot follow, but one where some of them would face issues but only for short term would be the NPA, as per guidelines, the gross NPA should be less than 3 % and Net NPA should be less than 1 % for the last two years. Now some of them are already meeting this criteria. So, they would like to become a universal bank and move into new areas. The winner would be one, who would be able to ensure that net interest margins are not hit that badly as they are bound when new business gets added. But surely this space would see some action sooner than later, in terms of some of them getting re-rated.
Tata Group seeks waiver from RBI to avoid Tata Sons IPO: Report
If Tata Sons reorganises debt by repaying borrowing or transferring the holding in Tata Capital to another entity, it may get deregistered as a core investment company (CIC) and upper-layer NBFC.
Taking care of the borrowing needs of Bharat is a big opportunity? 4 small finance banks with upside potential of up to 27%
While today’s movies may not show that rural money lenders are nothing but shark, but the hard reality is that if you were to ask your driver, your help at home, or the small chai shop owner how much interest he pays when he or she takes an unsecured loan taken in the private loan market which his largely controlled by individual players. It might surprise you, he or she might be paying four to five times more than the interest rate which any regular bank charges on an unsecured loan. This is when it comes to some pockets in urban areas. In rural areas, the situation was even worse. That is what led to the birth of microfinance companies, now many of them are small finance banks. They are providing lending at the lowest end of the pyramid. Now they have reached a stage where they are increasing their product market size also. With technology coming into picture in a major way, will they be able to scale up better?
RBI’s action not against Paytm; it is against payment bank; we support fintechs: Shaktikanta Das
Shaktikanta Das, Governor of RBI, clarifies that the RBI's action is against payment banks, not fintech companies like Paytm. Fintechs are free to grow as long as they are not NBFC lenders. The majority of Paytm users are linked to other banks, so only 15-20% of customers are impacted by RBI's restrictions.
Amit Shah launches NUCFDC, sets target to establish one urban cooperative bank in each town
Cooperation Minister Amit Shah launched the National Urban Cooperative Finance and Development Corporation (NUCFDC) to upgrade urban cooperative banks and set up one bank in each town. NUCFDC received RBI approval. It aims to ensure ATM facility, credit/debit cards, clearing system, SLR limit, and refinancing.
RBI cautions banks, NBFCs against complancency
Reserve Bank of India (RBI) governor Shaktikanta Das has asked banks to be on guard against complacency and be vigilent around build-up of risks in the financial sector. Das along with deputy governors M Rajeshwar Rao and Swaminathan J met CEOs of public sector banks on Tuesday, the first such meeting since July last year.
P2P companies go easy on partnership business as RBI sounds alert
According to the founders of several of these lending platforms, given that the Reserve Bank of India is scrutinising the sector, they are adopting a “wait-and-watch” policy before stitching these deep integrations. P2P platforms LenDenClub and Liquiloans led the partnership game by working closely with fintechs like Cred and BharatPe to source borrowers and lenders.
RBI deputy governor flags business risks for NBFCs
Addressing a NBFC summit organised by the Confederation of Indian Industry (CII) Rao said though total assets of NBFCs have increased to 18.7% of the banking sector assets from 13% a decade ago, there are certain risks in their business models or balance sheets which need to be monitored for necessary actions.
Why it's high time to amend alternative funds regulations
Sebi reports more than 40 cases, about ₹30,000 crore (around 3% of a ₹9.5 lakh crore industry), where AIFs appear to have been structured to facilitate circumvention of regulations. Sebi identifies the critical problem - 'most of the identified cases of circumvention had a single investor, or investors of the same group, i.e., narrow and connected investors, having majority contribution in or exercising control over the AIF'.
Karnataka Bank & Clix Capital partner for co lending
The partnership is focused on providing loans to the Indian MSME sector which is one of the biggest contributors to India's GDP and employment growth. The agreement is in line with the Reserve Bank of India's guidelines on co-lending by banks and NBFCs to priority sectors.
Pioneering change: Evolving products and technology in the time of regulatory shifts within financial services
As regulatory changes take root, the financial services industry in India stands at the crossroads of challenge and opportunity. The imperative to innovate, diversify, and balance short-term pressures against long-term gains is reshaping the narrative.
Unsecured retail loans' growth to ease in FY24: Crisil Ratings
"The recent regulatory measures are targeted at unsecured retail loans and do not impact the secured asset classes where growth is expected to be steady", said Gurpreet Chhatwal, managing director at Crisil Ratings.
RBI slaps fines on Axis Bank, Manappuram Finance
The Reserve Bank of India (RBI) has levied a monetary penalty of Rs 90.92 lakh on Axis Bank and Rs 42.78 lakh on gold loan firm Manappuram Finance for non-compliance with specific directions of the banking sector regulator. This penalty is attributed to the violation of guidelines outlined by the RBI on various aspects, as detailed in the 'Reserve Bank of India (KYC) Directions, 2016.
RBI asks Bajaj Finance to stop disbursal of loans under 'eCOM' and 'Insta EMI Card'
Last month, the RBI banned public sector Bank of Baroda (BoB) from onboarding any new customers onto its 'bob World' mobile application three months after a news network said the bank linked bank accounts to unregistered mobile numbers and signed them up to the application. Earlier in December 2020, the RBI had banned HDFC Bank the largest issuer of credit cards in the country, from issuing new cards and introducing digital products after multiple systemic glitches were reported in the preceding two years. The ban was lifted in August 2021.
RBI streamlines Internal ombudsman scheme of banks, other financial institutions to help customers
As per the RBI governor, the consolidation of master guidelines will fine tune the redressal of customers' complaints. In November 2021, the RBI announced the Integrated Ombudsman by merging three different ombudsman schemes. The current announcement deals with streamlining the operational aspect of the ombudsman scheme to make it easier for customers to file complaints.
Aditya L1: young scientists, women trailblazers behind India’s solar mission
As India's first space-based solar observatory, Aditya L1, takes giant strides in its sun mission, what’s not much known is that it was a group of youngsters, and the country’s women in science back home, who made the endeavour a reality. This and more in today’s ETtech Morning Dispatch.
New avenues open for IDFs but risks also higher: ICRA
New Reserve Bank of India (RBI) norms for infrastructure debt funds (IDFs) opens up new avenues of funding and capital raising and also provides these companies with wider segments for lending. However, easier guidelines alao mean that these companies will have to improve their risk and underwriting standards, rating agency ICRA said.
RBI issues revised guidelines for IDF-NBFCs
The Reserve Bank of India has revised its guidelines for Infrastructure Debt Fund-NBFCs (IDF-NBFCs) to enable them to play a greater role in financing the infrastructure sector as well as to harmonise the regulations governing financing of the infrastructure sector. IDF-NBFCs will now be required to have a minimum net owned fund of Rs 300 crore and a minimum capital-to-risk-weighted assets ratio of 15%. The requirement of a sponsor for an IDF-NBFC has now been withdrawn and shareholders of IDF-NBFCs would be subjected to scrutiny as applicable to other NBFCs.
One Card founders and Uni Cards NBFC licence applications face roadblocks from RBI
ET has learnt that sellers need to apply to the central bank saying that they intend to transfer the licence to the acquirer’s name.
RBI issues guidelines for default loss guarantee, provides breather to fintechs
The regulator has capped the FLDG at 5%, and lenders need to have proper board-approved policies.
RBI cancels registration of two entities for regulatory lapses
The Reserve Bank of India on Monday said it has cancelled registration of Pune-based Kudos Finance and Investments and Mumbai-based Credit Gate for regulatory lapses in lending practices.
Budget 2023: Indian shadow lenders call for rescue route from cumbersome compliance maze
Union Budget 2023: Most NBFCs believe they don’t have the required visibility and control in their organization's compliance program, according to report from TeamLease Regtech. The compliance challenge also abates NBFCs expansion process. The ad-hoc, paper-based, and people-dependent processes fail to scale due to these compliance codes. India's upcoming Budget thus has a task in hand to ease the cumbersome compliance burden.
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