Finance Minister Nirmala Sitharaman on Wednesday cautioned non-banking financial companies (NBFCs) against using financial inclusion as a cover for exploitative practices, urging the sector to adopt responsible lending and fair recovery norms.“Financial inclusion cannot be used as a pretext for financial exploitation,” she said at the NBFC Conclave in New Delhi, stressing the importance of building a sustainable and customer-centric credit ecosystem.
Sitharaman said that lending should be based on the borrower’s genuine needs and repayment capacity, and not aggressively pushed. She emphasised the need for fair pricing, with interest rates kept reasonable and all fees transparently disclosed, free of hidden charges or complex terms.
Touching on loan recovery practices, she called for a more empathetic and respectful approach in line with the Reserve Bank of India’s Fair Practices Code. The drive for growth, she added, must not compromise customer well-being.With NBFCs playing a key role in India’s development ambitions, Sitharaman said the sector must strengthen its risk management frameworks. She urged lenders to ensure their risk-taking is data-driven and within their financial capacity, and flagged the need for tighter oversight on asset-liability mismatches, funding tenors, and credit concentration.The finance minister highlighted the rapid expansion of NBFCs, with gross loan advances doubling to ₹48 lakh crore as of March 2025 from ₹24 lakh crore in 2021. Several large players now exhibit governance and compliance standards on par with banks, which, she said, could pave the way for them to transition into full-fledged lenders.She also called for full digital adoption across the loan lifecycle and proposed a minimum common technology standard for all registered NBFCs. Bank-NBFC partnerships, particularly in co-lending, should be institutionalised and scaled up, she added.First Published: Jul 9, 2025 10:24 PM IST
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