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The Reserve Bank of India Governor Shaktikanta Das has red-flagged certain regulated entities in the financial services sector for misusing the freedom to set interest rates and charging fees that are not permitted by the regulator and not disclosing them in the key facts statement (KFS).
Stating that customer protection is on top of RBI’s priorities, Das in the latest monetary policy statement said, “It has also been observed in some micro finance institutions and NBFCs that the interest rates on small value loans are high and appear to be usurious.”
He pointed out that while in general key guidelines on KFS are followed, “few regulated entities still charge fees, etc. that are not specified or disclosed in the Key Facts Statement.”
He stressed on the importance and need for regulated entities to judiciously use the regulatory freedom they have in setting interest rates and charges “to ensure fair and transparent pricing of products and services.”
Das further said the RBI is continuing its constructive engagements with such financial entities to safeguard the interest of customers and ensure overall financial stability.
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