RBI Governor Presses NBFCs on Lending Standards, Asset Quality

BANKINGFINANCE

Overview

Reserve Bank Governor Sanjay Malhotra convened a meeting with select Non-Banking Financial Companies (NBFCs), including housing finance firms and microfinance institutions. He stressed the critical importance of robust underwriting standards and vigilant asset quality monitoring. The discussion also covered customer centricity and responsible lending practices to ensure the sector's stable growth.

RBI Governor Directs NBFCs on Sound Lending Practices

Reserve Bank Governor Sanjay Malhotra on Monday urged select Non-Banking Financial Companies (NBFCs) to uphold strong underwriting standards and diligently monitor asset quality. The directive came during a meeting in Mumbai with managing directors and chief executive officers of key NBFCs, housing finance companies (HFCs), and microfinance institutions.

These entities collectively represent approximately 53% of the NBFC sector's total assets. The Reserve Bank of India (RBI) noted this meeting as part of its ongoing engagement with regulated entities. A similar gathering occurred on February 13, 2025.

Emphasis on Responsible Finance

Governor Malhotra highlighted the crucial role NBFCs and HFCs play in expanding credit access across the nation. He underscored responsible lending, customer focus, and effective grievance redressal as vital for maintaining sector confidence and fostering sustainable development.

Representatives from self-regulatory bodies like Sa-Dhan, the Micro Finance Institutions Network, and the Finance Industry Development Council also participated, sharing feedback on policy and operational matters. Deputy governors and senior RBI officials were also present.

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