Posts

RBI Draft Interest Rate Directions 2026: Is RBI Tightening NBFC Group Company Lending?

  -             Reading the RBI's proposed interest-rate framework beyond the headline The Reserve Bank of India’s proposed Reserve Bank of India (Interest Rates on Loans and Advances) Directions, 2026 may, at first glance, appear to be a technical exercise in consolidating the rules governing interest-rate determination. But a closer reading raises a broader regulatory question: Is RBI gradually moving towards a framework where an NBFC is expected to demonstrate genuine credit intermediation and risk-based lending, rather than merely functioning as a financing vehicle for its own group or promoter entities? The answer is not yet an outright “yes” in terms of a prohibition . The Draft Directions do not say that NBFCs cannot lend to subsidiaries, group companies or promoter entities. However, several elements of the proposed framework, when read together with RBI's existing regulatory architecture, point towards a stronge...
Post a Comment
Read more

Frequently Asked Questions (FAQs) on RBI's Draft NBFC Credit Facilities Amendment Directions, 2026

The Draft Reserve Bank of India (Non-Banking FinancialCompanies – Credit Facilities) Amendment Directions, 2026 , released on 6 August 2026 , introduces significant changes to the regulatory framework governing credit facilities offered by NBFCs. While the draft is concise, it raises several practical, legal, and operational questions. The following FAQs aim to assist NBFCs, fintech companies, legal professionals, compliance officers, and other stakeholders in understanding the implications of the proposed amendments. 1. What is the purpose of the Draft Amendment Directions? The Draft Amendment Directions seek to amend the Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Directions, 2025 by: introducing statutory definitions of "term loan" and "revolving credit" ; prohibiting NBFCs from offering revolving credit products; deleting the existing chapter governing demand/call loans; and making cons...
Post a Comment
Read more

RBI's Draft Credit Facilities Amendment Directions, 2026: End of Revolving Credit and Demand/Call Loans for NBFCs?

On 6 August 2026 , the Reserve Bank of India (RBI) issued the Draft Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Amendment Directions,2026 for public comments. While the draft comprises only two pages, the proposed amendments have the potential to significantly reshape the lending landscape for NBFCs. The amendments introduce statutory definitions for "term loan" and "revolving credit" , prohibit NBFCs from offering revolving credit products (except by authorised credit card issuers), and delete the existing regulatory framework governing Demand/Call Loans . For NBFCs offering credit lines, digital lending products, overdraft-type facilities, or callable loans, these proposals warrant immediate attention. Background: The draft seeks to amend the Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Directions, 2025 , issued on 28 November 2025 . RBI proposes these amendments in exercise of its powers und...
Post a Comment
Read more

Beyond RBI Returns: Critical Policies Every NBFC Should Have in Place

While RBI returns often receive the greatest attention, regulatory inspections increasingly focus on whether an NBFC has adopted, implemented and periodically reviewed the policies mandated under various Master Directions and circulars. The following table serves as a practical reference for NBFCs. Sl. No. Particulars Approved / Reviewed By Frequency Key Compliance Points 1 Asset Liability Management (ALM) Policy Board / Risk Management Committee Annual review with periodic ALCO monitoring Monitor maturity mismatches, liquidity gaps and funding profile 2 Business Continuity Plan (BCP) Board Annual Conduct BCP testing and maintain disaster recovery arrangements 3 Business Model Framework Board Annual Review strategic assumptions, product mix and business risks ...
Post a Comment
Read more