FSR 2025: Lending Infrastructure for Uncertain Times

Introduction

"The outlook for 2026 and beyond is shrouded in uncertainty," wrote RBI Governor Sanjay Malhotra in the December 2025 Financial Stability Report. Overall, India's financial system passed stress tests and remains robust. However, the FSR identifies several vulnerabilities. These include stretched asset valuations, rising public debt, and growing links among financial institutions.

For lenders, the challenge is immediate. Trade tensions and geopolitical conflicts create external volatility. This combines with segment stress and operational complexity. The question is no longer whether your institution can weather uncertainty. It is whether your technology infrastructure enables both agility and stability when shocks arrive.

In this environment, your lending stack becomes either your greatest advantage or your biggest constraint.

The Twin Challenges of 2025

External Volatility

The numbers tell a stark story. The United States imposed a cumulative 50% tariff on Indian goods in August 2025. By September, exports to the US fell 11.9% y-o-y. Geopolitical tensions continue to disrupt trade flows. Policy changes that once took months now happen in weeks.

For lenders, these shocks cascade through the system. Trade disruptions become working capital stress. Working capital stress becomes credit quality concerns. The velocity of change has fundamentally altered planning cycles.

Internal Complexity

At the same time, segment-level divergence has emerged. The overall system remains healthy, but personal loans and microfinance portfolios show stress. The numbers illustrate the severity. NBFC-MFI credit costs surged from 4.4% in September 2023 to 15.5% in September 2025. Microfinance sector credit contracted 8.5% in the first half of 2025-26.

This creates pressure to pivot product mix quickly while maintaining credit discipline.

The FSR also highlights interconnectedness as a systemic risk. If the most connected bank fails, it would cause a 2.3% solvency loss of total Tier 1 capital system-wide. Co-lending arrangements, FLDG structures, and NBFC funding relationships add layers of exposure that need monitoring. 

Lenders must now manage traditional portfolio risk alongside these operational complexities. The need is for systems to adapt quickly.

Why Legacy Systems Cannot Handle This

The Rigidity Problem

Legacy architectures rely on hardcoded product logic. Making changes requires months of development time. When the RBI announced trade relief measures, implementation was slow. Lenders with rigid systems struggled to adapt quickly.

These platforms also lack real-time stress testing capability. Quarterly reviews no longer suffice when external conditions change weekly.

The Data Fragmentation Problem

Most lending institutions operate separate systems. These include origination, loan management, collections, accounting, and reporting. Each system maintains its own version of truth. Reconciliation becomes a weekly or monthly ordeal.

The critical gap emerges during stress. A simple question like "What is our total exposure to counterparty X?" takes days to answer through manual aggregation. Data inconsistencies surface at the worst time. This happens when you assess exposure to stressed co-lending partners or NBFC counterparties.

The Speed Gap

When a segment shows stress, successful lenders pivot quickly to healthier products. Unsecured retail is under pressure. Institutions that can rapidly launch secured products gain advantage. These include gold loans, MSME financing, or trade credit.

Legacy systems require 6 to 12 months for new product launches. Modern requirements demand 2 to 4 weeks. This gap determines who captures opportunity and who watches from the sidelines.

What Modern Lending Infrastructure Needs

Unified Data Foundation

A single source of truth across all lending functions is non-negotiable. Real-time synchronization eliminates batch delays and reconciliation gaps. Every team works from the same consistent customer view. This includes direct loans, co-lending shares, guarantees, and counterparty positions.

This unified architecture provides clear visibility into portfolio composition and exposures. When RBI requests stress test submissions or exposure reports, accurate data is available immediately.

Configurability with Control

Low-code platforms allow business users to define products, pricing, and workflows without writing code. Regulatory changes like gold loan LTV tiers or trade relief deferment logic can be implemented in days instead of months.

The key is achieving configurability without sacrificing control. Modern platforms deliver flexibility through configuration layers, not code changes.

Integrated Workflow

Modern platforms create seamless data flow across the lending lifecycle. This covers origination, underwriting, disbursement, servicing, collections, and reporting. No manual handoffs introduce errors or delays. Collections intelligence feeds directly back into origination. This reveals which segments show early stress and which cohorts perform better. These insights inform credit decisions in real time.

Accounting updates automatically with every loan action. Disbursement, repayment, or restructuring all flow through to financial records without manual intervention.

Real-Time Risk Intelligence

Move from quarterly portfolio reviews to continuous monitoring. Stress testing becomes an operational capability, not just annual compliance. Granular visibility at segment, cohort, vintage, and geography levels enables proactive management.

Early warning systems flag deterioration before it becomes systemic. Exposure concentration tracking across products, geographies, and counterparties provides complete risk visibility.

Embedded Governance

Supervisory focus is increasingly shifting from outcomes to processes and controls. Embedded governance ensures control at every step. Audit trails, compliance checks, and maker-checker workflows are built into the platform. This makes regulatory reporting automatic rather than manual.

Ecosystem Connectivity

API-first architecture enables integration with emerging infrastructure. Account Aggregator, OCEN, and GST systems all become accessible data sources. Support for co-lending, FLDG, and syndication arrangements is built in, not bolted on.

As the FREE-AI framework and digital public infrastructure mature, integration-ready platforms adapt without major overhauls. The ecosystem continues to evolve. Your systems must evolve with it.

What Executives Should Do Now

Ask these questions about your current technology:

• How long does it take to launch a new product today?

• How quickly can you implement a regulatory change like trade relief measures?

• Can you identify all exposures to a specific counterparty within minutes?

• Is there one consistent customer view across all systems?

• Can you run stress scenarios on demand?

If the answers reveal rigidity or fragmentation, infrastructure transformation becomes a strategic priority. Consider these actions:

1. Prioritize unified data architecture over adding features. An integrated workflow from origination to collections delivers more value. This beats best-of-breed point solutions that do not talk to each other.

2. View technology as risk infrastructure, not just an efficiency tool. The institutions that passed FSR stress tests had systems enabling rapid scenario modelling and response.

3. Modernize during relative stability, not during crisis. When the next shock arrives, infrastructure will determine winners and losers.

OneFin's Approach

OneFin provides the infrastructure lending institutions need to thrive in uncertain markets:

• End-to-end unified platform covering loan origination, management, collections, and accounting

• Single data source eliminating reconciliation gaps and creating consistent visibility across all functions

• Low-code configuration enabling rapid adaptation to regulatory changes and market conditions

• Real-time analytics and exposure monitoring supporting proactive risk management

• API-native architecture integrating seamlessly with the broader financial ecosystem

• Proven scale: 16 lakh+ loans and 100 million API calls annually

Conclusion

The FSR states that resilience in uncertain times requires both prudence and agility. The differentiator among lenders is no longer just capital or balance sheet strength. Operational agility and data integrity now determine competitive advantage.

Fragmented systems create blind spots that amplify risk. Infrastructure choices made today will determine which institutions capture growth opportunities safely, and which miss them entirely.

Uncertainty is the new normal. The question is whether your systems are built for it.

To know more about OneFin, schedule a Demo.