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Informist, Thursday, Sept. 3, 2026

MUMBAI – Non-banking finance companies must strengthen their risk management framework, diversify funding sources and investing in robust cybersecurity as the sector expands its role in India's credit system, Reserve Bank of India's Deputy Governor Shirish Chandra Murmu Thursday said at an event. "Strong liquidity risk management is not optional," Murmu said, calling on NBFCs and housing finance companies to guard against funding concentration and shifts in market sentiment. Entities must also diversify their funding sources, while a deep and liquid corporate bond market would help strengthen the sector, Murmu said.

Murmu said India needs a strong and diverse credit system to support its Viksit Bharat objective. "India's credit system has for decades been centred around banks," Murmu said, adding that while the bank-led model had delivered scale and stability, it had also left gaps in remote areas, underserved segments, and niche markets where conventional collateral-based lending was less effective.

The gap is particularly significant in the micro, small and medium enterprises segment, where substantial credit needs remain unmet by formal lenders, Murmu said. NBFCs can help bridge these gaps through technology-enabled lending and greater use of cash-flow-based assessments. NBFCs are also well placed to lead the charge on financial inclusion and last-mile credit delivery, given their ability to use digital public infrastructure such as the Account Aggregator framework and Unified Lending Interface, Murmu said.

With credit growth accelerating, lenders need rigorous stress testing, early warning systems and dynamic provisioning to identify emerging asset-quality risks, Murmu said. Artificial intelligence and machine learning should be used more extensively to detect early signs of financial stress, he said, while stressing that growth must not come at the expense of underwriting standards.

Murmu also stressed the importance of governance, saying boards and senior management of NBFCs must ensure a culture of sustained compliance and ethics across the organisation. The RBI's regulatory approach will continue to focus on proportionate regulation and financial stability while allowing digital innovation to develop, Murmu said. The central bank has increasingly sought to apply existing regulatory principles to digital finance rather than create a separate framework for the sector.

As digitalisation deepens, cybersecurity must become a core priority for NBFCs and housing finance companies, Murmu said. "Entities must invest in strong cyber security" to protect customer data and maintain trust, he said, adding that cyber resilience must keep pace with technology adoption. Murmu said innovation should improve efficiency and fairness without excluding vulnerable customers or creating new risks.

The RBI will continue to support responsible growth and innovation while maintaining prudential risk management, he said.  End

Reported by Kabir Sharma

Edited by Akul Nishant Akhoury

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