RBI Deputy Governor Sets Out Five-Point Roadmap for NBFCs and HFCs

NBFCs and HFCs preparing for their next phase of growth now have a clearer sense of where RBI's supervisory attention will fall. Speaking at the 7th NBFC and HFC Summit in Mumbai on September 3, 2026, Deputy Governor Shri Shirish Chandra Murmu set out five areas — governance, liquidity, asset quality, customer conduct, and cyber resilience — that will shape supervisory expectations for the sector in the years ahead.

The address, titled "NBFCs, HFCs and the New Phase of Growth," does not introduce a new rule. Instead, it reviews a decade of regulatory reform and signals where boards and compliance functions at non-bank lenders should focus as the sector scales.

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Why This Matters

NBFCs and HFCs now account for a meaningfully larger share of India's credit system than they did a year ago. Shri Murmu noted that NBFC credit is about 16.7 per cent of nominal GDP, up from 15.9 per cent a year earlier, and equals about 27 per cent of the credit extended by Scheduled Commercial Banks, up from 26 per cent. As the sector's footprint grows, RBI's supervisory expectations grow with it — and this address is the clearest recent signal of where that attention will concentrate.

Who Is Affected?

The Regulatory Journey: Reforms RBI Reviewed

Before turning to priorities, Shri Murmu walked through the reforms RBI has introduced for NBFCs over the past five to six years. Taken together, they explain the regulatory foundation the sector now operates on.

Shri Murmu also listed specific growth-support measures RBI has introduced, without giving exact dates for each:

• Lower risk weights for infrastructure lending by NBFCs
• More flexibility for boards on related-party lending
• Inclusion of quarterly profit for computing net owned funds and capital
• Removal of prior approval for branch expansion by larger NBFCs — those with more than 1,000 branches
• Exemption of small NBFCs without public funds or customer interface, and with assets below ₹1,000 crore, from registration requirements

Regulatory Philosophy: Building the Foundation First

To explain RBI's approach, Shri Murmu used an analogy about a landmark skyscraper in the Middle East that began construction in January 2004 and reached its 100th floor in 36 months, eventually standing 2,717 feet tall as the world's tallest building — a project that, notably, spent 14 months on the foundation alone before any floor was built. (CorpLawUpdates note: this description corresponds to a well-known Gulf skyscraper, though the speech does not name it.) The point Shri Murmu drew from it: RBI's reforms — liquidity rules, scale-based layers, governance requirements — exist to build a foundation strong enough for the sector's continued growth, even when the pace of growth is fast.

RBI's Five Priorities for the Next Phase of Growth

The core of the address is a five-point list of areas Shri Murmu said matter most for the sector's sustainable growth going forward.

Digital Infrastructure and Innovation Themes

Shri Murmu pointed to India's digital public infrastructure — PMJDY, UPI, Aadhaar, the Account Aggregator framework, and the more recently launched Unified Lending Interface (ULI) — as tools NBFCs can use to lower the cost of credit and speed up disbursal. He described cash-flow based lending, using data points such as a food service provider's order values or footfall, as an emerging alternative to conventional balance-sheet lending. On regulatory approach, he noted RBI has chosen not to build a separate framework for digital finance, instead applying "substance over form" to adapt existing rules to digital contexts.

What Should Practitioners Watch?

Because this is a keynote address rather than a notified regulation, there is no compliance deadline or filing obligation to track. Practitioners advising NBFCs and HFCs should instead treat it as a supervisory signal:

• Boards should expect continued supervisory attention on liquidity concentration and funding diversification, not just at examination time but as an ongoing governance expectation.
• Risk and compliance functions should anticipate closer scrutiny of stress-testing and early-warning systems, particularly where AI/ML tools are used for borrower monitoring.
• Entities using recovery agents should review conduct practices against RBI's recent recovery-agent guidelines, referenced but not detailed in this address.
• NBFCs relying on the small-entity registration exemption should independently verify the applicable RBI circular for exact eligibility conditions, since the speech does not restate them in full.
• Cyber-security investment and data-protection practices are likely to remain a recurring supervisory theme rather than a one-time compliance item.

CorpLawUpdates Analysis

For compliance teams, the practical value of this address lies less in any single new requirement and more in its signalling function. RBI has, over successive years, moved from reactive crisis-response regulation — the 2019 Liquidity Risk Management framework followed liquidity stress in the sector — toward proportionate, scale-based, and increasingly consolidated regulation, culminating in the November 2025 exercise to bring entity-wise rules into one place. Reading this speech alongside that trajectory suggests RBI's supervisory focus for NBFCs and HFCs is shifting from foundational rule-building toward embedding governance, liquidity discipline, and cyber resilience as ongoing institutional practice rather than one-off compliance exercises. Where implementation difficulty is likely to arise is in mid-sized NBFCs that must now match large-NBFC-level governance and stress-testing sophistication without the same scale of resources — a tension the address does not resolve but does implicitly acknowledge by calling for governance "to scale" alongside growth.

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