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NBFCs approaching a new Regulatory Frontier

Mahesh Thakkar, Director General of Financial Industry Development Council (FIDC) was the chief guest at NBFC’s Tomorrow 2024. He delivered the keynote address. Edited excerpts:

Friends, earlier, RBI was active mainly in regulatory policy framework, but now they are very vigilant on the supervision framework also. They are putting in special efforts to find out errors, lapses, dilutions, if any in respect of any NBFCs, particularly SI NBFCs from the reports being filed online or during Inspection. Each NBFC has to be very up to date about the regulation, governance, compliance etc. We need to be in touch with each other, exchange information and be part of various committees at FIDC.

Recently, FIDC has come out with the two important documents – Vision Document and Code of Conduct – which were very well received by the NBFCs. This is necessary because there is a need for NBFCs to self-regulate. The code of conduct prescribes the rules and regulations for corporate governance, risk management, audit requirements, grievance redressal mechanism, delinquency management, education, outsourcing arrangements with the recovery management and engagement of these agencies.

The fair practice code of RBI has to be followed by all. The board level governance committees have to be formulated. FIDC guides the small NBFCs with the standard documentation, systems and legal recourses which can be followed. Some of the players like fintechs, account aggregators, P2P players, etc. may be finding it difficult to comply with RBI because their operation systems and models are new to everybody.

We at FIDC have a very efficient board of directors. We are part of the pre-budget meetings with the Finance Minister, consultation with RBI, Ministry of Finance, Road Transport Ministry, MSME Ministry, etc., whenever required. We have Representation Committee, Legal Committee, CFO Committee, HR Forum, Housing Finance Companies Forum, etc. Now we are forming separate sub-committees for factoring and IFCs.

We have very systematic data analysis on the asset side of the balance sheet of the NBFCs. We are now prescribing that every member will have to give the data in the standard format, which will then be compiled, analysed and published. On the asset side, as of now, we are working with CRIF and disseminating quarterly data and we give this data analysis category-wise, state-wise, size-wise, etc, in great detail on a quarterly basis.

Friends, together, we have overcome challenges and achieved remarkable milestones and come out stronger after every crisis. Our shared dedication defines us, and we are confident that the NBFC Sector will rise up and play its role in Viksit Bharat 2047.

Friends, whatever guidance you require, you can approach us anytime. You may write to us on [email protected]

Thank you very much.


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