NBFCs Gaining Traction But Troubled by Risks

Non-Banking Financial Companies are growing at an exponential rate in terms of popularity as well as revenue. One of the biggest Peer to Peer (P2P) platforms Faircent approved loans up to Rs. 123.28 lakh in just 3 years. It also released a social impact report in which it said that P2P lending has been of great help to Indian businesses and consumers. However, this impressive growth of the firm as well as thousands of other NBFCs in the country are riddled with a major problem, which is non-compliance.

Although the Reserve Bank of India has issued guidelines for the NBFCs to follow in the interest of the consumers and the economy, a large number of the firms have failed to comply. The Financial Intelligence Unit (FTU) has already issued a list of 8,491 NBFCs tagged ”High-Risk Financial Institutions” which are the firms found to be non-compliant with the Prevention of Money Laundering Act (PMLA).