RBI Deputy Governor urges NBFCs to prioritise asset quality

Reserve Bank Deputy Governor S C Murmu on Thursday asked non-bank finance companies (NBFCs) to ensure that the acceleration in loan growth does not come at the cost of asset quality concerns.

Addressing an event by industry grouping CII here, Murmu asked the non-bank lenders to also focus on other aspects including liquidity management, fair conduct, grievance redressal and responsible lending.

“As credit growth speeds up, so does the risk to asset quality... Let me be clear, growth must never come at the cost of underwriting standards,” Murmu said.

He asked NBFCs to do “rigorous” stress testing, early warning systems, and dynamic provisioning, and also invest in artificial intelligence and machine learning tools for early warnings on borrower stress.