India's RBI deputy governor Shirish Chandra Murmu lists asset quality and liquidity management as pillars for NBFC growth

Shirish Chandra Murmu, Deputy Governor of the Reserve Bank of India, outlined five critical areas required for non-banking finance companies (NBFCs) and housing finance companies (HFCs) to achieve sustainable growth. He addressed top NBFC executives at a summit organized by the Confederation of Indian Industry (CII). The regulator emphasized that strong liquidity risk management is mandatory because past events have exposed these entities to funding concentration shifts. Murmu stated that companies must diversify their funding sources and noted that a deep, liquid corporate bond market will support this effort. He warned that as credit growth accelerates, so does the risk to asset quality, urging lenders not to compromise underwriting standards for expansion. Murmu called for rigorous stress testing, early warning systems, and dynamic provisioning. He also indicated that artificial intelligence and machine learning tools should be utilized more frequently to detect early signs of borrower stress.