NBFCs seek RBI rethink on proposed revolving credit ban

India's largest non-banking finance companies (NBFCs), including Bajaj Finance, Tata Capital and Shriram Finance, are seeking a meeting with the RBI to urge it to reconsider a proposed blanket prohibition on revolving credit products. Senior representatives met on August 14 and will make a formal representation through the Finance Industry Development Council this week, sources told the Economic Times.

The NBFCs warn that the restriction, proposed in the draft RBI (NBFC-Credit Facilities) Amendment Directions, 2026, could disrupt credit products worth over Rs 2 lakh crore and constrain access to finance for MSMEs and individuals. The industry argues the proposal creates regulatory arbitrage in favour of banks and that the RBI's rationale is unclear, as modified products have not drawn adverse supervisory feedback recently.

However, the RBI has sought feedback from NBFCs on the draft guidelines while emphasising stronger compliance, internal audit and risk management, according to a report by NDTV Profit cited by IANS. The central bank urged NBFCs to identify risks from new products early and align frameworks with global standards, and also stressed effective consumer grievance redressal.