Following its historic rate cut, the RBI has launched high-level discussions with non-bank financial companies (NBFCs) to assess why rate reductions aren’t fully reflected in lending rates. Since May, the central bank has consulted NBFCs on structural and operational hurdles, aiming to improve policy transmission so consumers and small businesses can benefit from the lower rates. The move highlights the RBI’s dual challenge—stimulating growth while ensuring equitable credit access across financial sectors.
Enhanced uptake of cheaper funds by NBFCs could boost retail loans and MSME financing, segments where NBFCs hold strong influence. A successful transmission would also support broader economic goals tied to the RBI’s growth push. However, structural issues remain, and resolving them will require coordinated efforts between banks, NBFCs, and regulators to streamline processes and improve liquidity mechanisms.
