Empathy in Finance: Sitharaman's Call for NBFCs to Realign Practices

In a strong message to Non-Banking Financial Companies (NBFCs), Finance Minister Nirmala Sitharaman has underscored the necessity for fair and empathetic loan recovery practices that adhere to the Reserve Bank of India's (RBI) Fair Practices Code. Her remarks came during the NBFC Symposium 2025 in New Delhi, where she urged against harsh recovery tactics, particularly for small loans, emphasizing the importance of maintaining customer dignity.

Sitharaman highlighted the media's role in exposing harsh recovery methods and recounted instances where recovery actions were disproportionately severe for minuscule amounts such as Rs 500. Acknowledging the media's right to report such cases, she urged NBFCs to embody a more compassionate approach, reinforcing that growth should not come at the cost of customer well-being.

The minister also addressed the potential role of NBFCs in enhancing priority sector lending, noting the inefficiency of existing processes where unutilized funds are returned to institutions like NABARD and SIDBI. Calling for their collaboration in reaching last-mile beneficiaries, Sitharaman invited the Reserve Bank of India's guidance in facilitating this partnership without compromising financial norms. She urged leveraging NBFC presence to ensure timely and effective delivery of credit to those in need.

(With inputs from agencies.)