Major NBFCs urge RBI to rethink revolving credit ban
Some of India's biggest nonbank financial companies (NBFCs) (think Bajaj Finance, Tata Capital, and Shriram Finance) are asking the Reserve Bank of India (RBI) to rethink its plan to ban "revolving credit" products.
After meeting on August 14, these companies said they will send their concerns through the Finance Industry Development Council soon.
The RBI's draft rules, announced on August 6, would stop NBFCs from offering flexible credit lines and limit them to fixed-term loans.
Ban could disrupt ₹2L/cr lending
NBFCs warn that banning revolving credit could disrupt over ₹2 lakh crore in lending, mostly for micro, small, and medium enterprises (MSMEs) and individuals who rely on these flexible loans (that is about 90% of lending).
They are worried it will make borrowing tougher for small businesses and individuals while banks keep offering similar products.
The NBFCs say they want a proper chat with the RBI before any big changes happen, hoping for fair competition, and better access to credit for MSMEs and individuals.