The Reserve Bank of India (RBI) has cautioned non-bank finance companies (NBFCs) against relying too heavily on algorithm-based credit models. Deputy Governor Swaminathan Janakiraman highlighted the potential inaccuracies of such models and urged NBFCs to diversify their funding sources to mitigate liquidity risks. He advised against setting high-risk limits for segments like unsecured loans to avoid potential future issues caused by over-reliance on specific products.