RBI Deputy Governor Shirish Chandra Murmu has introduced five critical focus areas for NBFCs and HFCs to ensure sustainable, long-term growth. The regulator emphasized that rapid credit expansion must not come at the cost of governance or lending standards. This directive highlights the central bank's intent to manage systemic risks, such as liquidity concentration and unsecured loan defaults.
On September 3, 2026, at the 7th CII NBFC & HFC National Summit in Mumbai, the Reserve Bank of India (RBI) outlined a roadmap for the future of non-banking finance companies and housing finance companies. Deputy Governor Shirish Chandra Murmu identified five core pillars that the regulator expects the industry to prioritize: governance and culture, liquidity management, asset quality and credit risk, customer protection, and digital transformation.
Prioritizing Sustainability Over Rapid Expansion
The central bank has observed that while the non-banking sector has become a vital financial partner to the Indian economy, its rapid growth—specifically in unsecured retail lending—demands stricter oversight. The regulator's message is clear: companies must transition from a strategy of aggressive volume-based expansion to one focused on institutional strength. By emphasizing governance and culture, the RBI is signalling that boards of these entities are now directly responsible for the long-term stability of their firms, not just short-term profitability.
Key Areas of Regulatory Focus
Liquidity management emerged as a primary concern during the summit. The RBI urged firms to diversify their funding sources to reduce reliance on bank borrowings, which can leave companies vulnerable during periods of tight market liquidity. The regulator is actively encouraging the development of a deeper, more liquid corporate bond market to provide lenders with more stable and diverse funding options.
Asset quality remains a sensitive topic. With recent growth in small-ticket personal loans, the RBI is monitoring potential delinquencies closely. The regulator expects firms to implement rigorous stress testing to identify borrower distress early. Furthermore, the push for digital transformation is not just about adopting new technology; it is about ensuring that these systems have robust cybersecurity to protect customers and maintain the integrity of the financial system.
Impact on the Financial Sector
For the industry, these guidelines mean that compliance and risk management are no longer just support functions—they are core business requirements. While this shift may increase operational and compliance costs in the near term, the goal is to build a more resilient sector that can weather economic volatility. Investors may track how companies manage their cost-to-income ratios as they invest in these governance and tech upgrades.
Rising funding costs and intense competition from public sector banks in prime lending segments continue to put pressure on profit margins across the sector. Moving forward, the key monitorable for stakeholders will be the impact of these regulatory expectations on the credit growth pace of individual NBFCs and HFCs. Investors may look for updates in future earnings calls regarding how these entities are diversifying their funding profiles and managing their risk-weighted assets in line with these five pillars.