Search Global Export Import Trade Data
Recent Searches: No Recent Searches

RBI warns NBFCs a mode they use for giving loans may bring grief.

Date: 17-05-2024
Subject: RBI warns NBFCs a mode they use for giving loans may bring grief
The Reserve Bank of India has cautioned the country's non-bank finance companies against getting over-reliant on algo-based credit models or they may regret later.

"It is crucial to recognize that rule-based credit engines are only as effective as the data and criteria upon which they are built. Overreliance on historical data or algorithms may lead to oversights or inaccuracies in credit assessment, particularly in dynamic or evolving market conditions," RBI Deputy Governor Swaminathan J said in a speech on May 15. The speech was uploaded on the central bank's website on Wednesday.

Algorithm-driven lending models use various indicators, ranging from cash flow data to home addresses, to swiftly generate approvals for personal loans.

India's shadow lenders need to maintain a vigilant approach regarding their strengths and weaknesses, coupled with ongoing scrutiny and validation of credit scoring systems, Swaminathan said, adding it is essential for supervised entities to regularly adjust rule engines and models based on real-time insights and evolving situations.

Periodic validation, either internally or externally, is crucial to ensure the continued relevance of these models. I urge the heads of Risk and Internal Audit to give special focus to this mandate, the deputy governor said.

Swaminathan J urged risk function leaders to focus on the business models being adopted to ensure their ongoing viability. He also said it is important to periodically review the portfolio mix to mitigate the potential accumulation of risks, such as concentration risk.

"Over reliance on such products may bring grief at some point in time later," he said.

Furthermore, it's evident that the risk thresholds set for certain product categories or segments, such as unsecured lending, in some entities, are unreasonably high for long-term sustainability. I trust that risk managers will conduct a thorough evaluation of any potential risks accumulating in their portfolios.

RBI Governor Shaktikanta Das had also earlier this year warned against ‘algorithm-based’ lending by banks and said the country's lenders must take guard against depending on algo ..

Reuters had reported in March citing sources that the RBI is intensifying its efforts to curb "excessive enthusiasm" in retail lending, amid growing concerns about escalating risks to the financial system.

In recent months, the Reserve Bank of India has implemented stricter regulations on high-risk lending practices to enhance financial stability. In November, it increased the capital requirements for unsecured lending by banks. Additionally, it directed lenders to divest investments in a ..

 Source Name : Economic Times

Get Sample Now

Which service(s) are you interested in?
 Export Data
 Import Data
 Exim Help

What is New?

Date: 06-06-2024
Notification No. 40/2024 - Customs (N.T.)
Exchange Rate Notification No. 40/2024-Cus (NT) dated 06.06.2024-reg

Date: 16-05-2024
Notification No. 36/2024 - Customs (N.T.)
Exchange Rate Notification No. 36/2024-Cus (NT) dated 16.05.2024-reg

Date: 02-05-2024
Notification No. 34/2024 - Customs (N.T.)
Exchange Rate Notification No. 34/2024-Cus (NT) dated 02.05.2024-reg.

Date: 18-04-2024
Notification No. 30/2024 - Customs (N.T.)
Exchange Rate Notification No. 30/2024-Cus (NT) dated 18.04.2024-reg.

Date: 15-04-2024
Notification No.29/2024-CUSTOMS (N.T.)
Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver- Reg

Date: 12-04-2024
Seeks to extend the due date for filing of FORM GSTR-1, for the month of March 2024

Date: 10-04-2024
NOTIFICATION No. 08/2024- Central Tax
Seeks to extend the timeline for implementation of Notification No. 04/2024-CT dated 05.01.2024 from 1st April, 2024 to 15th May, 2024

Date: 09-04-2024
Notification No. 28/2024-CUSTOMS (N.T.)
Fixation of Tariff Value of Edible Oils, Brass Scrap, Areca Nut, Gold and Silver- Reg.

Date: 08-04-2024
Notification No 07/2024 – Central Tax
Seeks to provide waiver of interest for specified registered persons for specified tax periods

Date: 05-04-2024
Notification No. 23/2024-Customs
Seeks to amend No. 64/2023-Customs, dated the 7th december, 2023 in order to allow duty free imports of yellow peas with bill of lading issued on or before 30.06.2024

Exim Guru Copyright © 1999-2024 Exim Guru. All Rights Reserved.
The information presented on the site is believed to be accurate. However, InfodriveIndia takes no legal responsibilities for the validity of the information.
Please read our Terms of Use and Privacy Policy before you use this Export Import Data Directory.


C/o InfodriveIndia Pvt Ltd
F-19, Pocket F, Okhla Phase-I
Okhla Industrial Area
New Delhi - 110020, India
Phone : 011 - 40703001