News Desk: The Parliamentary Standing Committee on Finance has expressed concern over the reported use of bouncers and aggressive recovery practices by Non-Banking Financial Companies (NBFCs), calling for stronger monitoring and regulatory oversight of the sector. The issue was discussed during the committee’s deliberations on Thursday. Committee chairman Bhartruhari Mahtab said members had raised concerns over gaps in the functioning of NBFCs and sought the government’s views on measures being taken to address them. Mahtab said the growing role of NBFCs in the financial system makes regular regulatory supervision and an effective grievance-redressal mechanism increasingly important. According to him, the share of NBFCs in deposits and financing has risen substantially over the past 15 years, from around 10 per cent to 26 per cent.
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The committee’s major concern centred on small lending, where members flagged the use of bouncers for loan recovery. Mahtab said complaints relating to irregularities and possible fraud were also discussed, particularly in the small-lending segment. The panel also examined concerns involving larger NBFCs, where significant amounts of money are involved. It called for regular intervention by the Reserve Bank of India (RBI) and stronger monitoring, noting that many NBFCs are interconnected. Mahtab emphasised that regulatory lapses should invite appropriate action and said the monitoring mechanism needed to be strengthened as NBFCs increasingly raise funds from the market.
The committee’s observations come amid growing focus on responsible and transparent loan recovery practices. The RBI has also strengthened its framework governing recovery practices, including requirements relating to recovery agents, due diligence, conduct and oversight. The panel’s concerns are expected to add further pressure on NBFCs and regulators to ensure that loan recovery is conducted lawfully and without intimidation, while strengthening grievance mechanisms for borrowers.
