RBI Deputy Governor Shirish Chandra Murmu has delivered a strong message to the non-banking financial sector. Speaking at the CII NBFC & HFC Summit, he stated that growth must never come at the cost of underwriting standards (the process of checking if a borrower can repay). As credit growth speeds up, the risk to asset quality also increases. He warned that lenders should not get carried away by high numbers if they are not lending safely.

Murmu reminded Non-Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs) about past liquidity crises. These events showed how easily these firms can get into trouble if market sentiment changes or if they rely too much on one source of money. He emphasized that strong liquidity risk management (keeping enough cash to meet obligations) is no longer optional. The RBI expects firms to diversify where they get their funds from, rather than depending on a few big lenders.

The Deputy Governor pushed for the use of advanced technology. He recommended using Artificial Intelligence (AI) and Machine Learning (ML) to spot early signs of borrower stress before a loan turns into an NPA (Non-Performing Asset). He also called for rigorous stress testing and dynamic provisioning, which means setting aside money for potential losses in a proactive way. The goal is to catch problems early using data rather than waiting for a default to happen.

Digitalization was another major theme. While Murmu encouraged using blockchain for supply chain finance and AI for fraud detection, he warned about cyber risks. He told firms that cyber resilience must be a top priority to protect customer data. Innovation is good for efficiency, but it must be 'responsible.' This means new technology should not be used to exclude vulnerable people or to hide new risks from the regulator.

The RBI also highlighted the importance of customer trust. Murmu noted that the pace of innovation should not move faster than customer protection. He specifically mentioned recent RBI guidelines on recovery agents. He reminded lenders that in today’s world, bad feedback travels instantly, and there is no substitute for public trust. Responsible lending and proper grievance redressal (fixing customer complaints) are essential for long-term survival.

Despite the warnings, Murmu acknowledged the huge role NBFCs play in India. Currently, NBFC credit is about 16.7% of India's nominal GDP, up from 15.9% last year. Their credit is now equivalent to 27% of the total credit given by Scheduled Commercial Banks. They are filling gaps that traditional banks cannot reach, especially in remote areas and the MSME (Micro, Small, and Medium Enterprises) sector. There is a massive unmet credit need in these segments, providing a big opportunity for growth.

For Indian bank officers and NBFC employees, the message is clear: the regulator is watching the quality of your loan books. While shifting from collateral-based lending (taking security like gold or property) to data-driven lending is welcome, the basic rules of banking must stay. You must ensure that your underwriting remains tight. Bankers should prepare for more technology-driven oversight and expect the RBI to keep a close watch on how recovery agents and digital apps treat customers.