The Reserve Bank of India has proposed a sweeping overhaul of credit facility norms for non-banking financial companies, mandating a shift to term-loan structures while prohibiting most forms of revolving credit. According to the latest draft circular issued by the central bank, NBFCs shall only offer credit products which are in the nature of term loans and shall not offer any revolving credit products. However, this restriction will not apply to NBFCs that are authorised to issue credit cards by the central bank. The amendment will come into force immediately after the final guidelines are issued, with the central bank actively seeking input from stakeholders. The Draft Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Amendment Directions, 2026 were published on August 7, 2026, with the central bank inviting comments and feedback from regulated entities and other interested stakeholders by August 28, 2026.
The draft norms define term loans as fund-based credit facilities of a fixed principal amount, where the sanctioned limit is disbursed in one or more instalments and is repayable in accordance with a predetermined amortisation schedule. As reported by The Hindu BusinessLine, once disbursed, the sanctioned limit cannot be restored or replenished upon repayment of either the whole or a part of the principal amount. A 'revolving credit' refers to any fund-based credit facility, which does not meet the definition of a term loan. The existing Credit Facilities Directions, issued in November 2025, lay down the prudential framework governing credit facilities extended by NBFCs.
There are only two NBFCs that offer credit cards - SBI Card and BoB Cards, which will be exempt from the new restrictions. According to The Hindu BusinessLine, standalone NBFCs will require prior permissions and significant funding to independently offer credit cards. The central bank encourages innovation in financial systems and credit products while being overall in favour of deregulation, but brings in such prudential norms as safeguards. Revolving credit facilities include bank overdraft accounts, business working capital lines, and credit cards, which will be restricted to authorised NBFCs only.
