Lenders Law

The Reserve Bank of India (RBI) has issued the Draft Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Amendment Directions, 2026 (“ Draft Directions ”), inviting public comments by March 4, 2026 . The draft proposes a targeted recalibration of the NBFC regulatory framework , particularly for smaller, low-risk entities, by introducing a pathway for exemption from registration for select NBFCs. While the policy direction is clearly aligned with risk-based and proportional regulation , certain accompanying clarifications (FAQs) may require refinement to ensure that the intended relief is not diluted in practice. Key Proposals Under the Draft Directions: 1. Exemption From Registration for Select NBFCs: The Draft Directions propose that NBFCs meeting all of the following criteria may be exempt from registration under section 45-IA of the RBI Act, 1934: no acceptance of public funds ; no customer interface...

With banks implementing the Positive Pay mechanism pursuant to RBI directions , cheque return memos increasingly record reasons such as  “Positive Pay not registered”  or “Positive Pay mismatch” . This has given rise to a new question:  If a cheque is returned due to Positive Pay non-compliance, does Section 138 of the Negotiable Instruments Act, 1881 still apply? Inthe author's view, the answer is yes — since the dishonour is still attributable to the drawer . This post examines the issue through statutory interpretation and settled Supreme Court jurisprudence. Understanding the Positive Pay Mechanism: The Positive Pay system requires the drawer of a cheque to pre-register key cheque particulars —such as cheque number, date, amount, and payee name—with the bank before presentation. If the details are: Not registered, or Incorrectly registered, the cheque may be returned unpaid even if sufficient funds are available . The critical point is:  Positive Pay co...

RBI’s recent supervisory reviews of NBFCs repeatedly highlight one area of non-compliance: Aadhaar misuse in KYC — especially accepting unmasked Aadhaar copies , failing to obtain mandatory consent , or performing unauthorised Aadhaar verification . On  9 December 2025 , UIDAI notified the  Aadhaar (Authentication and Offline Verification) Amendment Regulations, 2025  to amend the 2021 Regulations .  This blog summarises what NBFCs must do now — and what must immediately stop. Key Amendments: 1. New Definitions Introduced: (i) " Aadhaar Application" [Reg. 2(1)(ac)]-  UIDAI now defines authorised mobile/web applications — including mAadhaar, Aadhaar App, QR Scanner App, myAadhaar Portal — which alone may be used to perform offline Aadhaar verification. NBFC implication:  All offline Aadhaar verification must be done only through these UIDAI-approved apps/tools. (ii) "Aadhaar Verifiable Credential (AVC)"  [Reg. 2(1)(be)]-   A new digital do...

The Reserve Bank of India (RBI) recently cancelled  the Certificate of Registration (CoR) of four Non-Banking Financial Companies (NBFCs). While CoR cancellations are not routine, they are a powerful supervisory tool used when an NBFC fails to comply with prudential, regulatory, or governance requirements. This development has again placed the spotlight on Section 45-IA(6) of the Reserve Bank of India Act, 1934 , the statutory basis for cancellation of an NBFC’s CoR. What Does Section 45-IA(6) of the RBI Act Provide? Section 45-IA deals with registration requirements for NBFCs . Sub-section (6) empowers RBI to cancel an NBFC’s CoR if it fails to comply with essential conditions. RBI may cancel the CoR if the NBFC: Fails to comply with conditions of registration; Does not maintain the prescribed Net Owned Fund (NOF); Fails to submit statutory returns or documents; Operates in a manner that is prejudicial to public interest; Violates RBI directions, circulars, o...

  The Insolvency and Bankruptcy Code, 2016 (“ IBC ”) created the framework of Information Utilities (IUs) to serve as authenticated repositories of financial information. A record of default from an IU is treated as conclusive evidence under Section 215 of the Code. A recurring issue for creditors is: Should the default be filed with an IU before sending a demand notice, or only before filing an insolvency application? Statutory Position Section 215(2) IBC provides that financial creditors shall submit information of default to an IU. Rule 4 of the Insolvency and Bankruptcy (Application to Adjudicating Authority) Rules, 2016  (" Application to AA Rules ") requires that an application be accompanied by a record of default from an IU “wherever available”. Further, Regulation 20(1A) of the IBBI (Information Utilities) Regulations, 2017 , as inserted by Notification No. IBBI/2022-23/GN/REG085 dated 14 June 2022, expressly provides that:  “Before filing an applicatio...

S. No. Compliance Relevant Provision Relevant Form / Portal Timeline Remarks 1 Display following information: (a) name and contact details (Telephone/ Mobile nos. and email address) of Grievance Redressal Officer. (b) If complaint/ dispute is not redressed within 1 (One) month, customer may appeal to Officer-in-Charge of Regional Office of DNBS of RBI (complete contact details), under whose jurisdiction registered office of NBFC falls. Para 12 of Reserve Bank of India (Non-Banking Financial Companies– Credit Facilities) Directions, 2025 - Ongoing Published at branches/places of business 2 Display following information: (a) name and contact details (Telephone/mobile number and E-mail ID) of Principal Nodal Officer. (b) details of complaint lodging portal of Ombudsman (https://cms.rbi.org.in) Para ...