Chief Economic Adviser (CEA) Krishnamurthy Subramanian on Thursday urged non-banking financial companies (NBFCs) to carefully monitor risks in their operations while playing a stronger role in advancing financial inclusion in India.
Speaking at FICCI’s first NBFC Summit, Subramanian emphasized that every NBFC must pay attention to rollover risk and interconnected risk—areas that can significantly affect stability in the financial system. He also cautioned against the practice of “zombie lending”, where stressed firms are kept afloat through repeated lending despite their weak fundamentals.
His remarks come against the backdrop of the IL&FS crisis of 2018, which exposed vulnerabilities in India’s NBFC sector and triggered a liquidity crunch, putting the segment under intense scrutiny.
The CEA also underlined the importance of technology adoption, saying the financial sector has the potential to make far greater use of digital tools and innovation. He noted that India’s growth story will be led by the financial sector, provided it strengthens its foundations while embracing inclusion and efficiency.
