RBI requests that NBFCs decrease their reliance on banks and obtain capital on a wide scale

 RBI requests that NBFCs decrease their reliance on banks and obtain capital on a wide scale

RBI requests that NBFCs decrease their reliance on banks and obtain capital on a wide scale

It is anticipated that loan to the retail and services sectors would propel the 12.2% growth in the consolidated balance sheet of scheduled commercial banks (SCBs) in 2022–2023.

High capital ratios, excellent asset quality, and robust profits growth all contribute to the Indian banking system's and NBFCs' continued strength and resilience.

The Reserve Bank of India urged for strengthening balance sheets and protecting against fraud and data breaches on Wednesday, and it also advised non-bank financial institutions to expand their fundraising in order to reduce their reliance on banks. The RBI's "Trends and Progress of Banking in India 2022–2023" study states that solid capital ratios, excellent asset quality, and robust profits growth continue to underpin the strength and resilience of the Indian banking sector and NBFCs.

It is anticipated that loan to the retail and services sectors would propel the 12.2% growth in the consolidated balance sheet of scheduled commercial banks (SCBs) in 2022–2023. Although it has not kept up with credit growth, it was said that deposit growth has also grown. It said, "With banks and NBFCs becoming more intertwined, they should concentrate on diversifying their funding sources and lowering their undue reliance on bank funding." Banks and non-banks alike must improve their customer service by showing more empathy.

According to the research, all parties involved must work together to safeguard the banking and payments system from cyber threats that might lead to fraud and data breaches. "Overall, banks and NBFCs must further develop their balance sheets through strong governance and risk administration procedures to meet the rising expectations of the Indian economy," it said.

The research states that the banks' asset quality improved in 2022–2023 and even in the first half of 2023–2024 (April–September). This improvement began in 2018–19. Things got better. The percentage was 3.2%. It said that in 2022–2023, net interest margin (NIM) and profitability were increased by greater net interest income and less provisions.