The Reserve Bank of India (RBI) is not in favour of allowing non-banking finance companies (NBFCs) to accept deposits, Deputy Governor N.S. Vishwanathan said, adding that while the central bank has given a few NBFCs licenses to accept deposits, it would not do so in the future.
‘No cancellation’
Mr.Vishwanathan, however, said that the licenses already given will not be revoked.
“Taking deposits will bring with it the treasury function, which would make business tougher for NBFCs,” Mr. Vishwanathan said while speaking at an Assocham event on NBFCs. “The RBI is not in favour of allowing NBFCs to take public deposits,” the Deputy Governor added.
“The RBI will not issue any more licenses to NBFCs to accept public deposits,” Mr.Vishwanathan added on the sidelines of the event. “But we will not revoke the licenses already given.”
NBFCs were one of the bright spots of the Indian economy, with the rate of growth of advances growing by 14-15%, which is higher than banks, Mr. Vishwanathan noted.
The RBI regulates NBFCs for three reasons, Mr.Vishwanathan added, saying that these include depositor protection, the fact that many NBFCs rely on banks to finance their liabilities, and also to regulate the interface between customers and NBFCs.
“There is scope for harmonisation of NBFC regulations, and we are working on it,” Mr. Vishwanathan said.