NBFCs need to be mindful of rising borrowing costs, says RBI report

While non-banking finance companies (NBFCs) have weathered the pandemic reasonably well, they have to be mindful of the rising borrowing costs they face in the wake of tightening monetary policy measures, the Reserve Bank of India (RBI) said in its Trend and Progress Report for 2021-22.

“With strong capital buffers, adequate provisions, and sufficient liquidity, NBFCs are poised for expansion. Nevertheless, going forward, NBFCs need to be wary of rising borrowing costs as financial conditions tighten,” the RBI said.

NBFCs had increased their borrowing from banks, which is one of the largest funding sources for these lenders, in the wake