SFBs should adopt responsible lending practices: RBI DG Swaminathan

RBI Deputy Governor M. Rajeshwar Rao addressed small finance banks (SFBs), urging them to adopt responsible lending practices to maintain financial stability. The speech highlighted the importance of inclusive banking, but also raised concerns about reckless lending, especially to vulnerable sections. Rao pointed out that SFBs have a unique position in providing credit to underserved populations and must ensure that credit is extended in a responsible manner. This includes transparent interest rates, timely debt collection, and the avoidance of over-indebtedness among borrowers. The RBI emphasized the need for ongoing risk management practices, stronger compliance frameworks, and ensuring that growth objectives do not compromise financial health.