In the latest RBI Bulletin for September, Murmu set out five areas for the NBFC and HFC sector.

“Good governance is the foundation of every strong institution. Boards and senior management must build a culture of sustained compliance and ethics across the organisation. As the sector scales, that strength must scale with it,” he suggested.

The second area is liquidity management. Past liquidity events have shown how exposed NBFCs and HFCs can be to shifts in market sentiment and funding concentration.

“Strong liquidity risk management is not optional. Recent episodes in some advanced economies are reminder of this. Entities must diversify their funding sources. A deep, liquid corporate bond market will help, and we will keep working with market participants to build one,” he wrote.

Securitisation should also grow beyond a liquidity tool – into a genuine way to transfer risk and free up capital, with proper skin-in-the-game and transparency rules, Murmu added.

Third, as credit growth speeds up, so does the risk to asset quality. Lenders need rigorous stress testing, early-warning systems, and dynamic provisioning. AI and machine learning tools should be used more to detect early signs of borrower stress.

“Let me be clear: growth must never come at the cost of underwriting standards,” he mentioned.

Fourth, customer trust is fundamental to sustainable business, and the pace of innovation must never outpace the protection, especially of vulnerable customers.

“Conduct regulation, grievance redressal, and responsible lending remain top priorities for us. Our recent guidelines on conduct of recovery agent reflect this priority. In an age where feedback travels instantly, there is no substitute for public trust,” said Murmu.