Lenders Law

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 ...

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...

 -  From Policy Intent to Enforceable Conduct Standards On 11 February 2026, the Reserve Bank of India released the   Draft Non-Banking Financial Companies – Responsible Business Conduct (Amendment) Directions, 2026  (“ Amendment Directions ”), effective from 1 July, 2026 . These amendments form part of the RBI’s broader effort to recalibrate conduct regulation for regulated entities, particularly in areas impacting customer protection, fairness and governance. Notably, the Amendment Directions flow directly from the policy intent articulated in  RBI’s Statement on Developmental and Regulatory Policies , released alongside the February 2026 Monetary Policy. The Amendment Directions therefore represent a deliberate regulatory progression rather than an isolated compliance update. Why Responsible Business Conduct Matters? The regulatory emphasis on conduct is rooted in persistent customer-level issues observed across the NBFC sector. Common themes emerging f...

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...