PTI chennai

RBI Deputy Governor Swaminathan J has asked the NBFCs to treat customers with dignity and ensure easy-to-understand pricing, free from hidden charges. Addressing a Conference of Non-Banking Financial Companies here on March 28, the Deputy Governor said the NBFC sector must live up to its promise of inclusion by treating customers with dignity, transparency, and care. 

"This entails ensuring transparent and easy-to-understand pricing, free from hidden charges or usurious interest rates. In instances of default, recovery practices must be conducted in an empathetic and respectful manner," Swaminathan said.

Unfortunately, some NBFCs think they can pursue a business model, where it is par for the course to resort to weak underwriting in pursuit of quick growth, coupled with excessive and unsustainable interest rates -- at times masked as upfront charges or processing fees -- followed by aggressive recovery practices upon default, he added. 

"Let me state unequivocally. This is not an acceptable model. Financial inclusion cannot be used as a pretext for financial exploitation. I urge each one of you to commit your institutions to upholding fairness in all your dealings," the senior official said. This responsibility for fair conduct is a shared commitment by the CEO, the Board, and assurance functions in any entity. A customer-centric culture must be driven from the top and embedded at all levels, Swaminathan said. In his address, the Deputy Governor also spoke on the role of the Audit Committee of the Board (ACB).