The MPC meeting that concluded on October 9 has once again retained the interest or repo rate at 6.50 per cent. This is reported for the 10th straight time for which the repo rate has been retained or remained unchanged.
RBI Warns NBFCs
In addition to this headline decision, the RBI governor Shaktikanta Das also touched upon some other crucial aspects in his televised address. Speaking about the banking system, although the governor said that the banking system is healthy, Das did not stop short of highlighting the aberration in the system, particularly with regard to the NBFCs or Non-Banking Financial Corporations.
According to Das, the sector has seen some of its constituents resort to aggressive, unsustainable growth approaches that could bring about issues in the time to come.
While acknowledging the extensive expansion in prospects that the sector has seen in the recent past, especially since the beginning of the Covid-19 pandemic, Shaktikanta Das also spoke of the perils that exist in the system.
Stress Buildup in Segments
Das said that these NBFCs are pursuing growth without administration. Das also said that the central bank is constantly monitoring the segment and urged NBFCs to deploy a better approach.
The central bank head also noted that some NBFCs, including MFIs, or Micro Finance Institution, and Housing Finance companies, or HFCs, are chasing excessive returns on equities.
The RBI also added that 'Self Correction' from the NBFCs would be desirable, and the central bank would take action when required. | Photo: Freepik
The RBI also added that 'Self Correction' from the NBFCs would be desirable, and the central bank would take action when required.
The governor also commented on the aspect of stress buildup in select insecure loan segments, including assumption purposes, microfinance loans and credit card outstanding.
Markets In Green
The Indian equity markets are trading in the green on Wednesday, October 9. The BSE Sensex gained 0.79 per cent or 642.98 points, taking the overall value to 82,277.79 points. The NSE Nifty also made gains of 0.82 per cent or 204.90 points, taking the overall value to 25,218.05.
