Failure of large HFCs similar to bank collapse, says RBI report

Financial stability report says recent NBFC crisis has brought greater discipline to sector

India’s financial system remains stable due to the improved resilience of the banking sector, but from a contagion risk perspective, if a large housing finance company (HFC) fails, it would impact as much as the failure of a large bank, the Reserve Bank of India (RBI) said in a report on Thursday. 

The bi-annual financial stability report noted that the recent pressure faced by non-banking financial companies (NBFCs) had brought in greater discipline to the sector. The report also pointed out stress in the retail lending segment and suggested exercising caution.

The HFC and NBFC sector is going through a