RBI (the Reserve Bank of India) has made an announcement that it would put non-banking financial companies (NBFCs) as well as Banks under a closer watch and have stepped up their scrutiny, especially those who operate on a larger scale. On Friday, a set of steps was announced by The Central Bank to further their stride which included strengthening and reinforcing their audit systems and formulating a dividend distribution policy.
RBI has also set forth some plans to bring a scale-based managing substructure for the NBFCs.
The Governor of RBI Shaktikanta Das has shown his concern and has asked for reviews on the NBFCs and UBCs audit systems and strengthening the governance and management of these entities. Governor Shaktikanta Das has also said that these entities have growing influence on other financial establishments and thus the economy of the country and should be under strict scrutiny as failing to do so may harm the country financially. As a part of this, RBI has set forth Risk Based Internal Audit (RBIA) in the NBFCs and UBCs that operate on larger scale as well as a more in-line guidelines on the process of recruitment of legal auditors for profit-oriented banks, NBFCs and UCBs for the improvement in the standard of financial reporting and news relay.
In regards to the economic low faced by the nation due to the COVID-19 pandemic, the Reserve Bank of India has made an appeal to the scheduled profit-oriented and co-operative banks not to make any dividend for the fiscal year of 2020 that ended in March. The RBI has said that it is very crucial that banks continue to save capitals to mitigate any losses that come in way.
In another step taken by the RBI, now regional rural banks have access to its liquidity window in order to expand their money lending and borrowing options. These Banks can now participate in the call money market as both lenders and borrowers.