FM Nirmala Sitharaman criticizes loan recovery practices, roadmap for stocks

Alliance Finance Minister Nirmala Sitharaman criticized the non-bank financial companies (NBFC) on Wednesday (July 9), urging them to adopt fair lending practices and humane recovery methods to address NBFC’s industry leaders in NBFC 2025.

She highlighted concerns about the increased complaints, saying the recovery process must operate within the scope of human and regulatory. The minister also said that NBFC rates should be reasonable and that all expenses must be clearly and transparently communicated to customers.

FM highlights the key role of NBFC in its journey to become a developed country by 2047. “It’s crucial for sectors ranging from agriculture and small businesses to middle-income households,” she said.

“NBFC is an essential credit provider for both farmers, micro-entrepreneurs and middle-class families,” she noted.

In view of global economic uncertainty, Sitharaman stressed the need for NBFC to strengthen risk management and liquidity supervision. She added that all loan decisions must be based on the borrower’s actual needs and repayment capabilities.

The department’s long-term vision

The Finance Minister outlined the government’s roadmap for the NBFCS, putting forward a range of long-term policy goals, and here, the key points of her speech:

• NBFC loans should reach at least 50% of total bank loans by 2047, up from 24% currently
• 50% of NBFC credit should flow into high-growth areas such as green plans, affordable housing and MSMES
• 20% of NBFC loans should be completed under the shared loan framework with the bank
• All NBFCs must adopt digital processes and are supported by common minimum technical standards
• The co-loan model is producing positive results – the partnership should be institutionalized
• The government will continue to support NBFC and will prioritize the concerns in the industry
• She noted that many large NBFCs have complied with bank-level governance and compliance regulations

She recommends developing digital co-loan platforms, common onboarding standards, and interoperable systems to improve efficiency and customer experience.

Sitharaman also urged the industry to pass these benefits to the end consumers, especially small borrowers.