The Reserve Bank of India (RBI), which had imposed temporary business restrictions on certain non-bank lenders due to complaints about exorbitant interest rates, has urged the leaders of large NBFCs to proactively promote fair lending and recovery practices while establishing strong grievance redressal mechanisms.
RBI Deputy Governor J. Swaminathan made this appeal on Friday at a conference in Chennai, organized by the central bank for senior executives of large NBFCs, statutory auditors, and chairpersons of audit committees.
In a statement, the RBI highlighted that Swaminathan "exhorted the NBFCs to proactively adopt fairness in lending and recovery supported by a robust grievance redress mechanism.”
Risk-Taking Activities
He also emphasized that NBFCs should engage in risk-taking activities that are both prudent and strategically planned, ensuring they do not exceed the entity’s capacity to absorb potential risks.
The RBI’s concerns arise from the high-interest rates charged by some finance companies. In recent months, the regulator has imposed lending restrictions on several firms, including Navi Finserv, Arohan Financial Services, and DMI Finance, due to allegations of usurious interest rates being levied on borrowers.
These restrictions were lifted after the finance companies implemented corrective actions.
ATM Fee Hike
Meanwhile, the RBI announced on Friday that starting May 1, the fee for ATM withdrawals exceeding the free monthly limit will increase by Rs 2. This adjustment means customers will now be charged up to Rs 23 per transaction beyond the free limit, up from the previous fee of Rs 21.
The central bank has clarified that customers will still be entitled to five free transactions (both financial and non-financial) per month at their own bank’s ATMs. Additionally, free transactions are allowed at other banks' ATMs—three in metro cities and five in non-metro areas.