Now Reading: RBI Proposes Ban on NBFC Revolving Credit Products
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RBI Proposes Ban on NBFC Revolving Credit Products
The Reserve Bank of India has proposed barring non-banking financial companies from offering revolving credit facilities, allowing them to provide only term loans under draft amendments to its Credit Facilities Directions. The…
The Story in Brief
The Reserve Bank of India has proposed barring non-banking financial companies from offering revolving credit facilities, allowing them to provide only term loans under draft amendments to its Credit Facilities Directions. The proposal defines a term loan as a fixed sanctioned amount repaid through a set schedule, without restoring the limit after repayment.
Facilities that do not meet this definition would be treated as revolving credit. The restriction would not cover NBFCs authorised to issue credit cards. Flexi loans, overdraft-style products and digital credit lines could need redesign if the proposal takes effect, since borrowers can draw and repay repeatedly within an approved limit.
The Indian Opinion
Claims that the proposal either ends convenient borrowing or affects every NBFC product go beyond the draft. The carve-out for authorised credit-card issuers matters, while the real impact depends on how the RBI classifies flexi loans and digital lines. Lenders and borrowers should focus on the final wording, especially whether repayment genuinely reduces a facility permanently. The number of affected products after the rules are notified will settle the scale of the change.
Source: bfsi.economictimes.indiatimes.com
This story was synthesised by AI from the source linked above.
