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Demand and Call Loans: Is Your NBFC Compliant with RBI's Regulatory Expectations?

Demand and Call Loans have traditionally been viewed as flexible lending instruments, allowing lenders to recall the facility at any time. However, unrestricted discretion in recalling such loans or structuring repayment terms can expose borrowers to uncertainty and increase operational as well as governance risks. Recognising these concerns, the Reserve Bank of India has prescribed specific regulatory expectations governing the sanction, review and administration of Demand and Call Loans. While these requirements may appear straightforward, they are often overlooked during policy formulation and loan documentation. This article discusses the key compliance requirements applicable to NBFCs and the practical steps necessary to ensure regulatory compliance. What is a Demand and Call Loan? A Demand and Call Loan is a credit facility that is repayable on demand or after a notice period specified by the lender. Unlike term loans, these facilities generally do not have a fixed repayment ...
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RBI’s NBFC Draft Directions, 2026: A New Compliance Architecture

1. Introduction The RBI has, through its April 2026 draft directions , initiated a fundamental recalibration of the regulatory framework governing NBFCs. For NBFCs, this is not merely a consolidation of legacy circulars. It represents a transition toward a supervision-led regulatory architecture , with direct implications for governance, credit strategy, outsourcing models, and regulatory exposure. This blog examines key elements emerging from select draft directions and their implications for NBFCs, fintechs, and regulated entities. 2. Compliance Function: Institutionalizing Control at the Core of NBFC Operations The Reserve Bank of India (Non-Banking Financial Companies – Compliance Function) Directions, 2026 introduce: Annual Compliance Risk Assessment:  Senior management is required to conduct a formal, enterprise-wide compliance risk assessment and implement a mitigation plan. Chief Compliance Officer (CCO) Framework: Mandatory appointment of a CCO (including exter...
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Corporate Laws (Amendment) Bill, 2026: A Structural Reset for Compliance, Governance & Restructuring

The proposed amendments to the Companies Act, 2013  mark a decisive shift in India’s corporate regulatory framework—balancing ease of doing business with stricter compliance enforcement. Drawing from the Notes on Clauses, the amendments reflect a move toward a flexible, prescription-driven regime, allowing the Government to calibrate compliance based on company size, nature, and activity. This post breaks down the key amendments and their practical impact. 1. Redefining “Small Company” – Expanded Eligibility: The threshold for classification as a small company has been significantly increased: Paid-up capital: up to ₹20 crore; Turnover: up to ₹200 crore. Why this matters:  Larger universe of companies benefit from: Reduced compliance burden; Simplified governance norms Particularly relevant for: Growth-stage startups and Mid-sized NBFC platforms. 2. Incorporation – Removal of Man...
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Minority Shareholder Rights in India: Implications for Lenders and Distressed Transactions

Minority shareholder disputes are rarely factored into credit underwriting. In practice, they surface precisely when lenders least want friction—during enforcement, restructurings, schemes of arrangement or exits. When they do, they slow timelines, destabilise valuations and weaken recoveries. This write up examines minority shareholder rights not as a corporate governance abstraction, but as a transaction and enforcement risk. Viewed through a lender and investor lens, minority claims often operate as delay levers—capable of stalling deals, reopening valuations and complicating otherwise executable resolutions. In distressed Indian companies, minority risk is rarely fatal—but it is frequently expensive. While minority shareholders often find themselves in a structurally weak position within Indian companies. However, for lenders, investors and in-house legal teams, minority shareholder disputes are no longer a purely equity-side issue—they directly impact enforcement timelines, transa...
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Key Negotiation Considerations in Contribution Agreements for AIFs

Contribution Agreements are often presented as standard form documents with limited scope for negotiation. In practice, however, they operate as core risk allocation instruments — and careful drafting can materially influence investor rights, governance, and downside protection. While commercial terms may be largely set, the legal framework around them is far from rigid. From transfer restrictions and co-investment structures to removal rights and drawdown conditions, there is meaningful scope to recalibrate how risk is shared between the Investment Manager and contributors. This post highlights key areas where targeted negotiation and precise drafting can significantly enhance investor protections — without disrupting the underlying commercial understanding. 1. Transfer of Units – Limiting Manager Discretion: A frequent issue arises in provisions that subject transfers to conditions “as the Investment Manager may determine in its discretion.” Such language is inherently broad an...
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Bitcoin Lending: From Crypto Innovation to Credit Architecture

Bitcoin lending has evolved from informal peer-to-peer arrangements into structured credit products , often routed through offshore special purpose vehicles (SPVs) and regulated intermediaries. At its core, bitcoin lending allows a borrower to access liquidity either in fiat or stablecoins , against a promise to repay with interest—sometimes with bitcoin involved as collateral, sometimes as the loan asset itself. For Indian lenders, fintechs, and compliance teams, the key question is no longer whether bitcoin lending exists, but how the risk is structured , where the enforceability sits , and whether it resembles credit or custody under Indian law. Two Distinct Models: A.  Bitcoin-Backed Loans (Collateralised Model): In a bitcoin-backed loan: The borrower pledges bitcoin as collateral; The lender disburses fiat currency or stablecoins; Bitcoin is typically custodied, escrowed, or controlled via smart contracts; Loan-to-Value (LTV) ratios, margin calls, and liquid...
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