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NBFCs must prioritise quality lending and MSME growth to drive India’s credit economy: SEBI’s G Ram Mohan Rao

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NBFCs must prioritise quality lending and MSME growth to drive India’s credit economy: SEBI’s G Ram Mohan Rao

NBFCs must prioritise quality lending and MSME growth to drive India’s credit economy: SEBI’s G Ram Mohan Rao

NBFCs must move beyond disbursement targets and focus on productive credit, asset quality and underserved borrowers to sustain growth, G Ram Mohan Rao, Executive Director, SEBI, said at the ETBFSI NBFC Leaders’ Retreat 2026. He also flagged opportunities in agricultural financing and cautioned against risks associated with tokenisation of loan assets.

India’s NBFCs must ensure that credit translates into productive economic activity , rather than being used primarily to repay existing debt, as they expand lending to MSMEs and other underserved segments, G Ram Mohan Rao, Executive Director, Securities and Exchange Board of India (SEBI), said. Delivering the keynote address at the ETBFSI NBFC Leaders’ Retreat 2026, Rao said the next phase of credit growth would depend on responsible lending, stronger borrower businesses and asset quality, rather than disbursement volumes alone. “Ensure that every paisa you lend to anyone should get into economic activity, not to repay any debt,” he said. Advt

Quality lending must drive credit growth Rao said NBFCs have a critical role in serving smaller borrowers and businesses that may not be adequately catered to by traditional banks. Banks account for around 78% of total credit, while NBFCs contribute approximately 22%, according to figures cited in his address. However, he cautioned lenders against pursuing aggressive growth without assessing how borrowers use credit. Instead, NBFCs should help businesses expand progressively, allowing access to larger loans as their financial performance improves.



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