Positive impactEconomy
Demystifying RBI’s Move on NBFCs Revolving Credit
Economic Times 4 hrs ago·21 Aug 2026, 2:55 am
The Reserve Bank of India (RBI) is proposing a significant shift in lending rules for Non-Banking Financial Companies (NBFCs). Currently, many NBFCs offer revolving credit, such as credit cards and overdrafts, which allows borrowers to use funds repeatedly up to a limit. The central bank now suggests restricting NBFCs to term loans, where money is given for a specific purpose and repaid in fixed installments.
This move aims to separate the roles of banks and NBFCs more clearly. Banks are expected to handle short-term, revolving credit needs, while NBFCs focus on longer-term, structured financing. For investors, this change could impact the business models of NBFCs that rely heavily on revolving products, potentially altering their risk profiles and profitability.
Investors should watch how NBFCs adapt to this regulation. Companies with strong term-loan portfolios may benefit, while those dependent on revolving credit might face challenges. The market will closely monitor the RBI's final guidelines to understand the long-term implications for the financial sector.
Excerpt from Economic Times
Updated On Aug 21, 2026 at 08:46 AM IST Large NBFCs expand workforce in FY26, banks rationalise staff; Bajaj Finance adds over 46,000 RBI prepones FCNR(B) swap deadline to Aug 31 as banks mobilise USD 52.3 billion Fintech funding isn't dead; irresponsible business models are: Ajay Rajan UPI emerges as key payment rail…Read the original at Economic Times
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