RBI Deputy Governor Shirish Chandra Murmu has outlined five critical areas for NBFCs to ensure sustainable growth, emphasizing that rapid expansion must not compromise . NBFC credit has surged to 16.7% of India's nominal GDP, highlighting their growing systemic importance.
16.7%
NBFC Credit to GDP (FY27)
FY26: 15.9%→16.7%
📊 One chart explains it
NBFC Credit Growth (Year-on-Year)
Takeaway: NBFC credit growth has significantly accelerated in the past year, reflecting increased financial activity in the sector.
⏳ Time Machine
How today’s news fits into the bigger picture
2018
IL&FS Crisis Exposes NBFC Vulnerabilities
The collapse of infrastructure lender IL&FS triggered a liquidity crisis across India's shadow banking sector, highlighting weaknesses in asset-liability management and excessive reliance on short-term funding for long-term assets.
October 2021
RBI Introduces Scale-Based Regulation
The RBI implemented a new scale-based regulatory framework for NBFCs, introducing a four-layered structure (Base Layer, Middle Layer, Upper Layer, Top Layer) with progressively stringent regulations based on asset size and systemic importance. This aimed to bring NBFCs closer to bank-like supervision.
March 2022
Tightened NPA Classification for NBFCs
The RBI harmonized Non-Performing Asset (NPA) classification norms for NBFCs with banks, mandating a 'daily stamping' approach and stricter definitions for overdue loans. This aimed to improve recognition across the financial system.
May 2026
Small NBFCs Exempted from Registration
The RBI exempted small, non-deposit taking NBFCs (with asset sizes under ₹1,000 crore and no public funds or customer interface) from mandatory registration and reserve fund requirements, effective July 1, 2026, to ease compliance for low-risk entities.
July 2026
NBFC Credit Growth Accelerates to 14.9%
Data showed NBFC credit growing 14.9% year-on-year to ₹59.9 lakh crore, accelerating from 10.6% a year earlier, with retail lending (up 21.4%) as the main driver. This growth highlighted the sector's increasing market presence.
August 2026
New Directions for Recovery Agents
The RBI introduced new directions on responsible business conduct for NBFCs, including comprehensive instructions on the conduct of recovery agents, effective January 1, 2027, to enhance customer protection.
Today
RBI Deputy Governor Murmu outlines five critical areas for NBFCs to ensure sustainable, quality-driven growth.
What happens next?
NBFCs are expected to strengthen governance and risk management over the next 12-18 months, potentially leading to a more stable, albeit slower, growth trajectory.
RBI Deputy Governor Shirish Chandra Murmu has identified five key areas for Non-Banking Financial Companies (NBFCs) and Housing Finance Companies (HFCs) to achieve sustainable growth, stressing that increased credit growth should never come at the expense of lending quality. These focus areas include governance, liquidity management, asset quality, customer protection, and digital transformation. NBFC credit now accounts for a significant 16.7% of India's nominal GDP, a rise from 15.9% a year ago, and represents 27% of the credit extended by Scheduled Commercial Banks. Murmu urged rigorous stress testing, early-warning systems, and dynamic provisioning, suggesting AI and machine learning tools for early detection of borrower stress. Strong liquidity management and diversifying funding sources are also critical to reduce vulnerabilities to market shifts. The sector saw a 14.9% year-on-year credit growth in July 2026, driven largely by a 21.4% surge in retail lending.
💭 If you're wondering…
Underwriting standards are the criteria lenders use to assess a borrower's creditworthiness and the risk associated with a loan. These standards help determine if a loan should be approved and on what terms, such as interest rate and collateral requirements.
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