RBI Governor Sanjay Malhotra Highlights Importance of Underwriting Standards for NBFCs

Reserve Bank Governor Sanjay Malhotra stressed the importance of robust underwriting standards and vigilant asset quality monitoring during a meeting with senior officials from select non-banking financial companies (NBFCs). This gathering was part of the Reserve Bank's ongoing interactions with regulated entities, including government NBFCs, housing finance companies (HFCs), and microfinance institutions.

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The meeting also saw participation from deputy governors T Rabi Sankar, Swaminathan J, Poonam Gupta, S C Murmu, and the MD and CEO of the National Housing Bank. Other senior officers from the Reserve Bank were present as well. These discussions are crucial for maintaining a healthy financial ecosystem.

Focus on Customer Centricity and Ethical Conduct

Governor Malhotra highlighted the essential role of NBFCs and HFCs in ensuring credit flow. He emphasised the need for ethical conduct, customer-centric approaches, and responsible lending practices. Prompt grievance redressal was also underscored as vital for maintaining confidence in the sector and supporting its sustainable growth.

The meeting included representatives from self-regulatory organisations like Sa-Dhan, the Micro Finance Institutions Network, and the Finance Industry Development Council. These entities collectively represent about 53% of NBFC sector assets. Their involvement is key to addressing policy issues and operational challenges within the sector.

Feedback on Policy Issues

Participants in the meeting provided feedback on various policy issues and operational matters affecting the NBFC sector. This exchange of ideas is part of the Reserve Bank's strategy to engage with industry stakeholders regularly. Such dialogues help in refining regulatory frameworks and addressing sector-specific concerns effectively.

The Reserve Bank had previously conducted a similar meeting with NBFCs on February 13, 2025. These periodic meetings are instrumental in fostering communication between regulators and industry players, ensuring that both parties work towards common goals for sector stability.

Governor Malhotra's remarks set a clear agenda for NBFCs to follow sound underwriting practices while maintaining high standards of asset quality monitoring. This approach aims to safeguard the financial health of these institutions and contribute to their orderly development.

With inputs from PTI