do not happen by side stepping the importance of robust risk management practices. i also would like to highlight here that the nbfcs operate in a dynamic and challenging environment, facing a multitude of risks that can impact their stability and operational resilience. let me highlight just three of these which i believe deserve heightened attention. cybersecurity and operational risks 1 / 5 bis - central bankers'speeches in today's digital age, cybersecurity threats represent a significant operational risk. the stark reality is that a cybercriminal needs to succeed only once, while organisations must always remain vigilant and resilient. one of the primary cybersecurity risks faced by nbfcs is the threat of data breaches and unauthorized access to sensitive information. there are also other forms of cyberattacks, including malware infections, phishing scams, and ransomware attacks. these attacks can disrupt operations, compromise systems and data integrity, and lead to financial extortion or loss of critical information. to mitigate cybersecurity risks, nbfcs must adopt a proactive and comprehensive approach to cybersecurity. this includes implementing robust cybersecurity policies and procedures, conducting regular risk assessments and vulnerability scans. deploying advanced security technology tools such as firewalls, encryption, and intrusion detection systems are non - negotiable. further, providing cybersecurity training and awareness programs for employees, on an ongoing basis, should become a way of life. risk management and internal audit functions have to urgently build on their skill sets so that they are able to assess periodically, the it and cyber security stance and preparedness of their entities. credit risks from rule - based credit models many nbfcs are increasingly turning to rule - based credit engines to accelerate the growth of their lending portfolios. while automation can enhance efficiency and scalability, nbfcs should not allow themselves to be blinded by these models. it is crucial to recognize that rule - based credit engines are only as effective as the data and criteria upon which they are built. overreliance on historical data or algorithms may lead to oversights or inaccuracies in credit assessment, particularly in dynamic or evolving market conditions. therefore, nbfcs must maintain a clear - eyed perspective on their capabilities and limitations, supplemented by continuous monitoring and validation of credit scoring models. it is incumbent upon the supervised entities to keep the rule engines and models calibrated from time to time

small loans and other financial services to low income groups, is a very important economic conduit designed to facilitate financial inclusion and assist the poor to work their way out of poverty. it is argued that microfinance can facilitate the achievement of national policies that target poverty reduction, empowerment of women, assisting vulnerable groups, and improving standards of living. 5. the journey of financial inclusion in the past two decades has been one of intensive efforts and incremental experimentation. however, the quantum jump came when pradhan mantri jan dhan yojana ( pmjdy ) was launched in 2014, which enabled achievement of the objective of providing bank accounts to adult population in almost every household. the reach of mobile phones and e - kyc has ensured these accounts are accessible to those who have been included in the financial services milieu. 6. the reserve bank of india has been making sustained efforts to increase the penetration of formal financial services in unbanked areas, while continuing with its policy of ensuring 1 / 5 bis central bankers'speeches adequate flow of credit to productive sectors of the economy and also ensuring the availability of banking services to all sections of people in the country. 7. till two decades ago, on the supply side, the absence of technology and infrastructure was a major impediment as it restricted expansion of banking services to far - flung areas of the country comprising over 600 thousand villages. the institutionalization of the framework of business correspondents ( bcs ) has been a major step towards enhancing access to banking services. the rbi advocated a combination of ‘ brick and mortar ’ structure with technology for extending financial inclusion in the geographically dispersed areas. with all these measures, the number of banking outlets in villages has gone up significantly. 8. the new banking entities ( i. e. two new universal banks and ten small finance banks ) have also helped to further the cause of financial inclusion in the country. considering the strong linkage between financial inclusion and payment systems, rbi has also taken several steps including encouraging use of mobile banking, pre - paid instruments such as digital and mobile wallets, etc. for more than a decade now, banks have worked hard to sustain the momentum for achieving the objective of financial inclusion. 9. financial inclusion is becoming a focus area for banks, nbfcs, financial technology ( fintechs ) and other financial entities. small finance banks have also been set up to further financial inclusion with a client base comprising mainly of migrant labour workforce, low income households,