The meeting will be part of the series of discussions the Central Bank is holding with the boards and senior management of its regulated entities.
Gross advances of NBFCs grew at a robust 21.1 per cent year-on-year (yoy) at end-September 2025, while gross advances of Scheduled Commercial Banks (SCBs) grew 11 per cent, according to the latest Financial Stability Report (FSR). This report is a semi-annual publication of all supervisors in the financial sector.
Within gross advances, consumer segment NBFCs’ advances rose 21.3 percent year-on-year as of September-end 2025, while SCBs witnessed 16.8 percent growth.
Noting the growing dependence of NBFCs on external financing, the FSR noted that this has increased the NBFC sector’s sensitivity to exchange rate volatility, which could partially erode the benefits of lower financing costs during periods of stress. It is striking that almost 86 percent of the loans are hedged in foreign currencies.
Main concern
The report notes that the growth of non-bank financial intermediaries (NBFIs: NBFCs, including microfinance institutions and housing finance companies; mutual funds; insurance and pension funds; development finance institutions; and other financial intermediation activities) and their increasing interlinkages with the banking system are a major concern worldwide. Banks’ exposures to NBFIs are also increasing in India.
During his meeting last month with the heads of public sector banks and select private banks, RBI Governor Sanjay Malhotra asked them to avoid complacency and remain vigilant in a dynamic environment.
The aforementioned warning came even as he emphasized that there will be a steady improvement in the health and operations of the banking sector by 2025.
Published on January 4, 2026
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