RBI Governor raises concerns over NBFCs’ bank loan reliance

Reserve Bank of India (RBI) Governor Shaktikanta Das has emphasized upon the increasing connectivity between banks and Non-Banking Financial Companies (NBFCs). He urged banks to continually assess their exposure to NBFCs and the exposure of individual NBFCs to multiple banks, as concentrated linkages could pose "contagion risks." He was speaking at the FIBAC 2023 annual conference Jointly organised by FICCI and IBA in Mumbai on Wednesday.
He said that NBFCs should focus on broad-basing funding sources and reduce overdependence on banks for funding. He said, that as credit growth is accelerating, banks and NBFCs should take due care to ensure that credit growth remains sustainable and all forms of exuberance need to be avoided. He outlined four key areas of focus: maintaining sustainable credit growth, enhancing asset-liability management, monitoring the interconnectedness of banks and NBFCs, and ensuring that microfinance institutions (MFIs) price loans judiciously.Das also cautioned lenders against too much reliance on the risk models of these tech-driven entities under lending collaborations. 
The RBI Governor further said that new risks and new sources of risks are also coming up and new opportunities are also knocking on the doors therefore this is a time to take advantage of them. He also reiterated that International confidence in India's prospects is at an all-time high.Das said financial stability is the backbone of any country's growth. Price stability also impacts a variety of factors including financial stability therefore both are essential, he added.