NBFCs Must Maintain Vigil Against Operational Risks, Says RBI Deputy Governor

Non-bank lenders must bolster governance and assurance functions against a multitude of risks emanating from the evolving financial landscape, Reserve Bank of India Deputy Governor Swaminathan J. said on Wednesday.

In a conference for heads of assurance functions from select NBFCs, Swaminathan highlighted the need to maintain constant vigil against operational risks, cybersecurity and more. About 280 participants, representing more than 100 NBFCs—comprising chief compliance officers, chief risk officers and heads of internal audit of select non-banking entities—attended the conference.

"In the highly dynamic and challenging environment in which financial entities operate, they are exposed to a multitude of risks that can impact their financial and operational resilience," RBI said in a statement.

Swaminathan also spoke about credit risks from rule-based credit models and liquidity risks, while highlighting that the central bank expects lenders to "ensure independent and meaningful assurance functions as well as fair and transparent conduct towards customers.".

RBI Deputy Governor M. Rajeshwar Rao, in his keynote address, outlined the contribution of the NBFCs to last-mile credit delivery. He set forth the role of assurance functions in issues such as third-party partnerships and operational risks, customer conduct, and transparency in operations.