Failure of a large NBFC can disrupt small, mid-sized ones: RBI Deputy Governor.

Reserve Bank of India Deputy Governor M Rajeshwar Rao on Friday cautioned that the failure of any large non-banking finance company (NBFC) or housing finance company (HFC) may translate into a risk to its lenders with the potential to create a contagion.

“Failure of any large and deeply interconnected NBFC can also cause disruption to the operations of the small and mid-sized NBFCs …,” he said at a CII NBFC summit.

While we are aware that differential regulation in NBFC sector is required to allow it to bridge the gap in last mile connectivity and exhibit dynamism, this premise remains valid till the time their scale of operations is low,” he said.