The RBI’s revolving-credit rule treats every NBFC like a bad lender
The post The RBI’s revolving-credit rule treats every NBFC like a bad lender appeared first on The Ken .
The Reserve Bank of India (RBI) has proposed new rules that would prohibit most non-bank financial companies (NBFCs) from offering revolving credit. Revolving credit allows borrowers to repeatedly borrow and repay the same amount, without starting over. This is in contrast to term loans, where borrowers borrow a specific amount, repay it in full, and then must apply for another loan.
The RBI's draft directions, which are open for public comment until August 28th, would require NBFCs to only offer term loans, with the exception of those authorized to issue credit cards. This proposal effectively removes revolving credit products, including those offered through UPI, from most NBFCs. Bajaj Finance and Tata Capital are examples of large non-banks that currently provide flexi-loans and business lines of credit with a revolving credit structure.
The RBI's decision could significantly impact the credit distribution landscape in India, as UPI has become a powerful tool for lenders to reach consumers.
Written by urgent.news from The Ken's reporting — not their text. Machine-written — may contain errors; check the original before relying on it.
