Reserve Bank of India Deputy Governor Shirish Murmu highlights the pivotal role of non-banking financial companies in expanding formal credit through digital infrastructure, while emphasizing the need for responsible governance and innovative risk management.
At a time when lenders are under pressure to expand credit without loosening standards, Reserve Bank of India Deputy Governor Shirish Chandra Murmu said non-banking financial companies are becoming central to efforts to widen formal lending in India. Speaking at the CII NBFC and HFC Summit on Thursday, he said these firms have moved well beyond their earlier role as mere alternatives to banks and now serve as specialised lenders in remote areas, underserved markets and niche sectors.
Murmu said the next phase of growth could come from improving what he described as last-mile credit access. He pointed to India’s digital public infrastructure, including UPI, Aadhaar, the Account Aggregator system and the Unified Lending Interface, as tools that can cut lending friction, speed up disbursals and reduce the cost of credit. According to Murmu, consent-based data sharing can help lenders assess borrowers more accurately, easing dependence on physical collateral and opening formal finance to micro, small and medium-sized enterprises as well as microfinance borrowers.
He said the opportunity for NBFCs and housing finance companies is especially large in areas such as supply chain finance, infrastructure debt, affordable housing and vehicle finance, where lenders can design repayment structures around cash flows rather than standardised products. Murmu also cited the sector’s growing scale, saying NBFC credit now equals about 16.7% of nominal gross domestic product, up from 15.9% a year earlier, and accounts for roughly 27% of credit extended by scheduled commercial banks, compared with 26% a year ago.
But Murmu paired that optimism with a clear warning: expansion must be matched by stronger governance, careful liquidity management and responsible lending. The Economic Times reported that he listed governance and culture, asset quality, customer protection and digital transformation among the main pillars of sustainable growth. He also urged lenders to diversify funding sources, deepen India’s corporate bond market and use securitisation more effectively as a way to transfer risk and free up capital. In a separate report, The Economic Times said he also pressed NBFCs to use artificial intelligence and machine learning to identify signs of borrower stress earlier.
The remarks come as the Reserve Bank has proposed tighter rules for some revolving retail credit products offered by NBFCs, including flexi loans and overdraft-style facilities. Under the draft framework, such products could be required to operate more like term loans, a change that could affect offerings sold directly or through fintech partnerships. The move underlines the central bank’s attempt to balance wider credit access with a firmer grip on risk, especially as financial services increasingly move onto digital platforms that blur the lines between regulated and unregulated players.
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