NBFC norms will check regulatory arbitrage, support growth: Experts

The Reserve Bank’s plan to use scale-based approach to regulate and enhance minimum capital requirement of non-banking financial companies (NBFCs) will reduce arbitrage and support their sound growth, analysts have said.

NBFC executives and rating agency analysts said the financial sector regulator needs to provide a clear path for the transition of large, complex, well-regulated and well-governed NBFCs into banks.

An analyst with a rating agency said the regulation should be ownership neutral and avoid special treatment. He added that state-owned finance companies should be treated on a par with their private counterparts.

Government-owned NBFCs are still in the transition period wherein they