NBFCs Should Diversify Risks Across Sectors: Former Sbi Chief Rajnish Kumar

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According to Rajnish Kumar, a former chairman of the State Bank of India, non-banking financial enterprises must diversify their risks across industries and regions, maintain capital adequacy standards, and implement core banking solutions moving forward.

Additionally, Kumar stated that NBFCs are better able to take risks than banks and that the regulatory posture will harden as the regulatory arbitrage between lenders and non-banking firms disappears.

According to former RBI governor Raghuram Rajan, the NBFCs were the origin of the NPA issue in terms of asset quality review (AQR) of lenders. Risk management and governance are the key components of the whole problem.

He stated during an event hosted by the micro-finance organisation VFS Capital here on Friday evening that NBFCs must have a diversified approach across industries and geographical areas while also being cognizant of the risk matrix.

By 2025, according to Kumar, NBFCs must meet capital adequacy standards, roll out core banking solutions, and make proper disclosures.

According to him, NBFCs account for close to 23% of all loans in the financial industry.

Lenders cannot escape responsibility for NPA in the banking industry, according to the former SBI CEO, who also said that poor government policies in the road, coal, power, and telecom sectors are also to blame.
The NPS epidemic is a loop that keeps resurfacing, he claimed.

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