RBI hits NBFCs hard with two new regulations

Jan 30, 2024

The podcast explores the recent regulations imposed by the RBI on NBFCs and banks, including risk weightages and restrictions on lending/investing activities. It discusses the impact on digital lending startups, credit card limits, conflict of interest rules, and AIFs. The hosts debate the proportionality of these measures and their implications for the economy. Other topics covered include capital efficiency in lending, implications on personal loans and NBFC investments, loans against securities, billionaires' tax avoidance strategies, and proactive regulatory measures by the RBI.

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Introduction

00:00 • 2min

New RBI Regulations on Personal Unsecured Loans and NBFC Investments

02:22 • 7min

Understanding Capital Efficiency, Interest Rates, and ROE in Lending

09:17 • 3min

Implications of RBI Regulations on NBFCs and Personal Loans

12:11 • 33min

Loans Against Securities: Benefits and Drawbacks

45:15 • 6min

Tax Avoidance Strategies of Billionaires

51:23 • 12min

Proactive regulatory measures and addressing potential issues

01:03:52 • 4min

Expanding the Bond Market with Alternative Investment Funds

01:07:30 • 3min

In today's episode, we delve deep into the recent actions taken by the Reserve Bank of India (RBI) towards the end of 2023 and the ensuing ripple effects they've set off.

The RBI, often the silent architect of our financial landscape, has made strategic manoeuvres that reshape the terrain for banks, non-banking financial companies (NBFCs), and borrowers.

Discover how these regulatory shifts could impact financial decisions and the broader economic landscape. From the nuances of risk weights to the implications for personal loan growth, this episode promises to demystify the complex world of financial regulations in a digestible and engaging format.

Here is a quick overview of what we talk about:

We unpack the RBI's directives regarding risk weights and the restrictions placed on simultaneous lending and investing activities by financial institutions.
Dive into how startups offering digital lending products, like CRED and Paytm, are affected and the challenges they face under the new regulations.
Explore why your credit card limits might be scrutinised and how conflict of interest rules reshape lending dynamics.
Understand why the RBI's focus on Alternative Investment Funds (AIFs) matters and how it impacts investors' portfolios.
Debate whether these measures reflect a proportionate response from the RBI and what they suggest about the current state of our economy.

Timestamps

00:00 Introduction and Disclaimer 01:34 Deepak demystifies the two new regulations by RBI on Banks and NBFC 05:37 What’s the impact of these new regulations? Why should we care? 16:05 Why is RBI more concerned about personal loans? 24:54 Why aren’t you positive about the RBI action here? What’s wrong with the slowing loan growth? 32:20 If Startups are ready to take the risk, why is RBI stopping them? 45:14 Even after this bull run, why isn’t there lending against securities? 52:11 RBI has a new rule prohibiting Banks and NBFCs from evergreening loans through AIFs. 01:03:51 Is this a warning, a sign that the economy is over-heating?