Risk management and consumer protection: RBI’s roadmap for NBFCs

RBI Deputy Governor Shirish Chandra Murmu outlined a detailed risk‑management and consumer‑protection agenda for non‑bank financial companies. As loan portfolios swell, the probability of non‑performing assets rises, making proactive measures indispensable.

Murmu called for regular stress‑testing programmes, dynamic provisioning and early‑warning systems that can flag deteriorating borrower conditions. He urged NBFCs to adopt artificial intelligence and machine‑learning tools to detect early signs of financial stress among borrowers while maintaining strict credit‑approval standards.

Consumer trust was presented as the sector’s most valuable asset. The regulator stressed that financial innovation must never outpace consumer safeguards, particularly for vulnerable groups. Conduct‑based regulation, efficient grievance redressal mechanisms and responsible lending practices were identified as top priorities.

The RBI’s September bulletin noted that NBFC loans now constitute 16.7% of nominal GDP, up from 15.9% a year earlier, and that NBFCs hold a 27% share of total bank credit, an increase from 26%. These figures highlight the growing systemic importance of NBFCs, reinforcing the need for rigorous risk oversight and strong consumer protection frameworks.

By integrating advanced analytics into credit monitoring and strengthening consumer‑centric policies, NBFCs can mitigate risk, preserve asset quality and sustain confidence among borrowers and investors alike.