RBI Governor urges NBFCs to maintain sound underwriting, closely monitor asset quality

RBI Governor Sanjay Malhotra on Monday underlined the need for sound underwriting standards and close monitoring of asset quality at a meeting with senior officials of select non-banking financial companies (NBFCs) in Mumbai.

Addressing managing directors and chief executive officers of select NBFCs, housing finance companies (HFCs) and microfinance institutions, the Governor said NBFCs and HFCs play a critical role in facilitating credit flow in the economy, an RBI statement said.

Malhotra emphasised the importance of customer-centricity, ethical conduct and responsible lending along with prompt grievance redressal for preserving confidence in the sector and supporting its orderly and sustainable development.

The meeting, held as part of the Reserve Bank of India’s ongoing engagement with regulated entities, was attended by top executives of NBFCs accounting for about 53% of the sector’s assets.

Industry representatives from self-regulatory organisations, Sa-Dhan, the Micro Finance Institutions Network and the Finance Industry Development Council also participated.

Deputy Governors T Rabi Sankar, Swaminathan J, Poonam Gupta and S C Murmu were present at the meeting, along with the managing director and chief executive officer of the National Housing Bank and other senior RBI officials.

During the discussion, participants shared feedback on policy issues and operational matters relating to the NBFC sector, the RBI said.

At a similar meeting with NBFCs in February 2025, then RBI Governor Shaktikanta Das had underscored the significant role played by NBFCs in credit intermediation, particularly in making credit available for small businesses and niche segments.

Das had stressed upon balancing growth aspirations with sound practices for ensuring inclusive development, customer protection and financial stability.

He had urged the NBFCs to further their contribution towards financial inclusion by becoming part of Unified Lending Interface (ULI) being put in place by the Reserve Bank.