New Delhi, March 28 -- Indian banks should avoid chasing credit growth at the expense of financial stability, the Department of Financial Services (DFS) secretary M. Nagaraju said on Friday, flagging lenders' past challenges with sour assets.

"I want to be emphatic on one point. The pursuit of credit growth must never come at the cost of financial stability. The lessons of the NPA (non-performing asset) crisis of the previous decade are well-learned and must never be forgotten," Nagaraju said at the Mint India Investment Summit & Awards in Mumbai on Friday.

As credit expands, maintaining asset quality, strong capital buffers, rigorous underwriting, and robust governance will remain non-negotiable, he added.

"Growth and financial stabil...