Give banks an oversight over lending practices of NBFC borrowers: SBI MD

SBI's managing director C S Setty on Friday pitched for banks to have an oversight on lending practices of borrowers from the non-bank lenders' segment.

Speaking at a conference organised by industry lobby grouping IMC, he said non-bank lenders should follow the same risk underwriting and credit monitoring principles as done by larger banks from whom they borrow money.

He said a good proportion of banks' lending comprises lending to Non Banking Finance Companies (NBFCs) or Micro Finance Institutions (MFIs), and while the bank books may look clean from the outside, it may not be a proper representation of the incipient stress if any.

"...the lending practices of these institutions which are borrowing from us, I think the banks have to have oversight on that," Setty told reporters, adding that the issue is "not serious".

Banks which have access to low-cost deposits often get into on-lending arrangements with smaller entities like NBFCs who have a better reach, wherein the NBFCs execu