New Delhi [India], The Reserve Bank of India (RBI) on Thursday cautioned non-banking financial companies (NBFCs) against certain systemic risks, complexity and interconnectedness, Swaminathan said while addressing a conference of heads of NBFCs held in Mumbai. J, Deputy Governor RBI said many NBFCs are increasingly moving towards rule-based credit engines to accelerate the growth of their loan portfolio. He expressed concern that while automation can increase efficiency and scalability, NBFCs should not allow themselves to be blinded by these models, as excessive reliance on historical data or algorithms can lead to mistakes in credit assessment, especially in dynamic or evolving ones. In market conditions. Therefore, NBFCs should maintain a clear view on their capabilities and limitations, as well as continuously monitor the validation of credit scoring models. They highlighted liquidity risks arising from funding source concentration and maturity mismatches and added excessive reliance on certain funding. Sources said liquidity risks for NBFCs have worsened, especially during market stress. While ripe mismatches between assets and liabilities may also aggravate funding shortfalls, diversification and prudent liquidity management are important, he said, adding that the RBI plans to invest in early warning systems, stress testing capabilities and monitoring of vulnerability assessments, cyber key risk indicators. Emphasizing the need "Customer protection is a key element of policy making at the RBI, incorporating the service-oriented nature of the financial services industry, protecting the interests of customers and the priorities of your regulated entities," he said during the Heads of Assurance Conference. Should be most important in NBFC.