MUMBAI: RBI deputy governor Swaminathan J has sounded a phrase of warning for small finance banks (SFBs).
Swaminathan has requested the boards of those banks to evaluate whether or not there’s overdependence on high-cost time period deposits or bulk deposits from a restricted variety of establishments from the purpose of long-term stability. The deputy governor additionally cautioned towards charging excessive rates of interest and levying usurious charges on debtors.
Talking at a convention final week, Swaminathan stated that the expectation behind licencing of SFBs was that they’d play an important position in driving inclusive development by extending monetary companies to the underserved, fostering entrepreneurship, and supporting financial progress.To realize this the SFBs ought to leverage technological improvements just like the Unified Lending Interface for environment friendly and value efficient supply, he stated.
“It’s disheartening to return throughout egregious practices by some SFBs, equivalent to charging extreme rates of interest, gathering instalments upfront in addition to not adjusting such advance collections towards mortgage excellent, levying of usurious charges, and so on. It’s also noticed that grievance redressal mechanism is way from ample in most SFBs,” stated Swaminathan.
