The Reserve Bank of India (RBI) has warned that Non-Banking Financial Companies (NBFCs) are becoming more vulnerable to currency fluctuations due to their increasing reliance on external borrowings. While these foreign currency loans have helped stabilize funding costs, the RBI noted that even with hedging, exchange rate volatility could diminish the benefits. The central bank also observed a rise in fresh loan defaults and write-offs within the NBFC sector, despite an overall decrease in gross non-performing assets.