Complex, interconnected NBFCs warrants more co-ordination among regulators, says RBI DG Rajeshwar Rao

India’s Deputy Governor of the Reserve Bank of India (RBI), Rajeshwar Rao, highlighted the complexities of interconnected non-banking financial companies (NBFCs) and stressed the need for better regulatory coordination among institutions. Speaking at a conference, he emphasized that the increasing size and influence of NBFCs in the financial system necessitate stronger oversight mechanisms. Rao pointed out risks such as liquidity challenges and systemic vulnerabilities that arise from the interdependence of financial entities. He called for enhanced risk management frameworks and greater collaboration among regulators to ensure financial stability. This address underscores the growing significance of NBFCs in the Indian economy and the critical need for robust regulation to mitigate potential risks. The RBI’s proactive stance highlights its commitment to fostering a resilient and secure financial ecosystem.