Finance Minister Nirmala Sitharaman on Wednesday called on India’s non-banking financial companies (NBFCs) to significantly scale up their role in the financial system, setting a bold target for the sector to disburse 50% of the credit currently handled by scheduled commercial banks by 2047.Speaking at an NBFC conclave, Sitharaman said, “NBFCs are no longer shadow banks, but systemically significant entities. Their governance and compliance frameworks are now comparable to those of public sector banks.”
Currently, NBFCs account for around 24% of the total credit volume disbursed by scheduled commercial banks (SCBs). The Finance Minister said, “NBFC credit should aim to reach at least 50% of the total volume disbursed by SCBs by 2047.”
She stressed that NBFCs have played a critical role in credit expansion over the past decade, noting that NBFC credit growth has outpaced that of banks. To achieve the goals of Viksit Bharat by 2047, Sitharaman emphasised that both banks and NBFCs must scale up lending in tandem.
On the regulatory front, Sitharaman said the RBI’s recent measures have helped reduce the cost of funds for NBFCs, and she urged the sector to “pass on the benefits of this reduction onto customers.”The Finance Minister also issued a sharp caution on lending practices, stating that “financial inclusion cannot be used as a pretext for financial exploitation.” She added that “lending should be based on the genuine needs and repayment capacity of customers. Loans should not be aggressively marketed or pushed onto individuals.”Highlighting the need for transparency, Sitharaman said, “Interest rates should be reasonable, and all charges should be clearly disclosed in a simple and transparent manner, free from hidden costs or complicated terms.” She also underlined that recovery practices must be fair, empathetic and in strict adherence to RBI’s Fair Practices Code.She suggested that 20% of NBFC lending should happen under the co-lending framework with banks, to foster greater collaboration and reach.Calling for a technology leap, the Finance Minister urged the sector to aim for 100% digital adoption across the entire loan lifecycle, and asked the Department of Financial Services (DFS) to work on minimum common technology standards for NBFCs to enhance interoperability and efficiency.Finally, she requested the RBI to maintain ongoing engagement with NBFCs, to support policy evolution and industry growth.(Edited by : Akanksha Upadhyay)First Published: Jul 9, 2025 9:52 PM IST
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