RBI Governor Flags Rising Interconnectivity in Banking NBFCs

Reserve Bank of India (RBI) Governor Shaktikanta Das has raised concerns over the increasing interconnectivity between banks and Non-Banking Financial Companies (NBFCs). The acknowledgement of this growing trend underscores the need for regulatory attention and risk management in the financial sector. Governor Das's remarks draw attention to the intricate relationships between traditional banks and NBFCs, emphasising the potential implications for financial stability. As interconnectivity rises, there is a heightened importance for robust regulatory frameworks and proactive measures to mitigate systemic risks. The RBI's focus on the evolving dynamics between banks and NBFCs aligns with the central bank's commitment to maintaining a resilient and stable financial system. Governor Das's cautionary note indicates the need for continuous monitoring and adaptation of regulatory policies to address emerging challenges in the financial landscape. The increasing interconnectivity in the banking-NBFC space reflects the evolving nature of financial services and the interconnectedness of various players in the sector. The RBI's proactive stance in acknowledging and addressing these trends demonstrates a commitment to safeguarding the integrity and stability of India's financial system.