12/08/2026
⚖️ RBI’s Latest Draft on NBFC Credit Facilities: Is the Era of “Revolving Credit” for NBFCs Changing?
A seemingly short RBI draft amendment may have far-reaching consequences for NBFC credit-product design.
The proposed amendment introduces a specific distinction between Term Loans and Revolving Credit, while proposing that NBFCs should offer credit products like term loans and should not offer revolving credit products, except in the case of NBFCs authorised to issue credit cards.
This raises some important questions for the industry:
🔍 What happens to existing credit-line products ?
🔍 How should flexi-loans and pre-approved limits be structured?
🔍 Does a product remain a term loan if the sanctioned limit can effectively be replenished?
🔍 Will LMS/LOS technology need to be redesigned?
🔍 What should NBFCs review in their LSP agreements, loan agreements and customer disclosures?
🔍 How should fintechs structure products offered through regulated NBFC partners?
The important takeaway is simple:
Product nomenclature cannot substitute for regulatory substance.
NBFCs and fintechs should start reviewing their credit-product architecture now—not merely from a legal perspective, but across business, credit, compliance, technology, documentation and risk governance.
📌 The regulatory classification of a credit product should be established before the product is launched—not after the system is built.
I have shared a detailed analysis of the proposed amendment and its potential implications for NBFCs, digital lenders and fintech/LSP ecosystems.
Worth reading for anyone involved in NBFC product development, RBI compliance or digital lending.
Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Directions, 2025, which were issued on November 28, 2025.
