RBI Draft: Your NBFC Credit Line May Vanish Soon

RBI's draft rules may ban NBFCs from offering revolving credit lines like credit cards or overdrafts. If finalised, all NBFC lending must be fixed-term loans with a set repayment schedule — affecting millions of borrowers who rely on flexible credit.

Here's what happened: RBI has released draft directions proposing that NBFCs restrict all lending to term loans — fixed principal, fixed repayment schedule — and stop offering revolving credit facilities.. Revolving credit allows borrowers to repay and re-draw funds repeatedly up to a set limit; this structure is used in many fintech credit lines and BNPL products backed by NBFCs.. The draft is open for public comment before it becomes binding, but if finalised it could force NBFCs to restructure or shut down all existing revolving credit products..

What you should do: Check your credit line or BNPL app's terms and conditions to confirm whether it is issued by an NBFC or a bank — banks are not covered by this draft rule.. If you rely on an NBFC credit line for emergency liquidity, start building an alternate buffer — a bank overdraft facility or a liquid mutual fund can serve the same purpose.. Monitor RBI's official website for the final circular; once issued, NBFCs will be given a transition timeline — use that window to repay or restructure any revolving balances you hold..

Pro tip: Many fintech apps display a bank's brand but the actual lending licence belongs to an NBFC partner — always scroll to the bottom of the app's 'about' or loan agreement page to identify the actual lender before assuming bank-level product continuity.

If this affects your borrowing choices, compare current personal loan options from 100+ lenders on GoCredit.