Reserve Bank of India (RBI) Deputy Governor Shirish Chandra Murmu has outlined five critical areas for sustainable growth in the non-banking financial company (NBFC) and housing finance company (HFC) sector, as it navigates a shift from being alternative lenders to becoming specialised financial partners. The priorities were published in the RBI Bulletin for September 2026, underscoring the regulator's sharpening focus on a sector whose credit footprint continues to expand.

NBFC credit now stands at 16.7% of nominal GDP, up from 15.9% a year earlier, and accounts for roughly 27% of credit extended by Scheduled Commercial Banks, compared with 26% the previous year. The steady rise signals both growing systemic importance and the need for tighter guardrails.

Governance and Compliance Culture

Murmu placed sound governance at the top of the agenda. 'Good governance is the foundation of every strong institution. Boards and senior management must build a culture of sustained compliance and ethics across the organisation. As the sector scales, that strength must scale with it,' he said. The message was directed particularly at larger NBFCs whose rapid expansion has at times outpaced internal controls.

Liquidity Risk Management

The second priority is liquidity management, an area where past stress events — including episodes in some advanced economies — have exposed the vulnerability of NBFCs and HFCs to sudden shifts in market sentiment and funding concentration. 'Strong liquidity risk management is not optional,' Murmu wrote, calling on entities to diversify funding sources. He also flagged the need for a deeper, more liquid corporate bond market and said the RBI would continue working with market participants toward that goal. Separately, he noted that securitisation should evolve beyond a liquidity instrument into a genuine mechanism for risk transfer, backed by proper skin-in-the-game and transparency rules.

Asset Quality and Credit Discipline

With credit growth accelerating, Murmu stressed the third priority: protecting asset quality. He called for rigorous stress testing, early-warning systems, and dynamic provisioning, and encouraged greater use of AI and machine learning tools to detect early signs of borrower stress. 'Let me be clear: growth must never come at the cost of underwriting standards,' he stated. This comes amid broader concerns from the RBI about pockets of overleveraging in the retail and unsecured lending segments.

Customer Protection and Conduct

The fourth area is customer trust. Murmu emphasised that the pace of financial innovation must not outstrip the protection of customers, particularly vulnerable ones. 'Conduct regulation, grievance redressal, and responsible lending remain top priorities for us. Our recent guidelines on conduct of recovery agents reflect this priority. In an age where feedback travels instantly, there is no substitute for public trust,' he said. The reference to recovery-agent guidelines points to a specific regulatory action the RBI has taken in recent months to address coercive collection practices.

Digital Transformation and Cyber Resilience

The fifth priority is digital transformation, with the Deputy Governor urging NBFCs to deepen technology adoption — from blockchain in supply chain finance to AI in fraud detection. However, he coupled the call for innovation with a clear warning: 'Digitalisation brings cyber risk. Cyber resilience must stay a top priority. Entities must invest in strong cyber security to protect customer data and maintain trust. Innovation must serve both efficiency and fairness,' Murmu stressed.

The statement arrives as the RBI tightens its supervisory framework for the sector, and as several large NBFCs prepare for potential transition to the bank licensing route. How the sector responds to these five imperatives is likely to shape both its regulatory treatment and its long-term growth trajectory.