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RBI Governor: Revolving Credit Under Scrutiny
7 Oct
Summary
- RBI reviews NBFC revolving credit; draft norms issued.
- Governor cites potential systemic risks for review.
- Sector's credit products worth over Rs 2 lakh crore affected.
The Reserve Bank of India (RBI) is currently examining regulations concerning revolving credit products offered by non-banking finance companies (NBFCs). Governor Sanjay Malhotra clarified that these products were not originally regulatorily approved. The RBI issued draft norms on August 6, 2026, proposing that NBFCs should exclusively provide term loans.
Malhotra stated that the RBI will assess the potential systemic risks before finalizing its decision. NBFCs have expressed concerns that the proposed changes could disrupt credit products exceeding Rs 2 lakh crore. This situation may constrain access to finance for micro, small, and medium enterprises (MSMEs) and individuals.
Despite these regulatory considerations, Malhotra assured that bank credit to NBFCs remains robust at approximately 37%. He also noted that there are no immediate concerns regarding the asset quality of the NBFC sector, emphasizing the RBI's continuous vigilance against developing risks.
