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...

One of the most common questions raised by founders, CFOs, legal teams, and compliance officers in Base-Layer NBFCs (NBFC-BL) is:  “Can we lend to the same category of borrowers at rates as low as 8% and as high as 30%?” The short answer is:  Yes — RBI permits flexibility, but not arbitrariness. NBFCs can vary pricing significantly provided the variation is justified through a transparent, risk-based framework approved by the Board. This article explains what RBI expects, how interest rates should be determined, and what practices can expose an NBFC to supervisory concerns. RBI’s Core Requirements for Base-Layer NBFCs Under the Reserve Bank of India (Non-Banking Financial Companies – Responsible Business Conduct) Directions, 2025 , NBFCs must maintain: 1. A Board-Approved Interest Rate Policy: This policy must define: Internal methodology for setting interest rates; Risk-based pricing parameters; Rationale for deviations; Minimum and maximum rate bands; ...

In a significant move towards regulatory simplification, the Reserve Bank of India (RBI) has consolidated the existing universe of regulatory instructions issued up to October 9, 2025 into 238 Draft Master Directions . This consolidation spans 11 types of regulated entities , including banks, NBFCs, payment system operators, and others. Importantly, the consolidation also incorporates Scale Based Regulations (SBR) for NBFCs , reflecting the RBI’s risk-based and size-oriented approach to supervision. As part of this initiative, approximately 9,000 circulars , including Master Circulars and Master Directions currently administered by the Department of Regulation, are proposed to be repealed . This is intended to reduce duplication, simplify compliance, and provide a more coherent regulatory framework for all stakeholders. Key Highlights 238 Draft Master Directions now consolidate prior instructions across 11 entity types. Scale Based Regulations (SBR) for NBFCs included to...