RBI Proposes Curbs on Revolving Credit, Forcing NBFCs to Rethink Lending Products

The Reserve Bank of India’s proposed restrictions on revolving credit facilities could trigger a significant redesign of how non-banking financial companies (NBFCs) structure, manage and service credit products, with lenders now assessing both the regulatory and technology implications of a potential shift towards term-loan-based lending.

The RBI released the draft Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Amendment Directions, 2026 on August 6 and has invited stakeholder comments until August 28. The proposal remains subject to consultation. It seeks to require most NBFCs to offer credit products in the nature of term loans rather than revolving facilities, with an exception for NBFCs authorised to issue credit cards. Under the proposed framework, a term loan would have a fixed principal and predetermined repayment structure, with repaid principal not automatically restoring the sanctioned limit.

The move could affect flexi-loans, overdraft-style facilities and other products used across corporate, MSME and unsecured personal lending. Industry estimates cited in reports suggest potentially affected products represent more than ₹2 lakh crore in credit exposure and have been growing at around 15-20% annually. The industry has raised concerns over borrower flexibility, particularly for MSMEs, while the Finance Industry Development Council (FIDC) is collating lender feedback. Bajaj Finance, Tata Capital and Shriram Finance have reportedly sought discussions with the RBI, with lenders arguing that a broad restriction could affect credit access and create competitive concerns because banks may continue offering similar facilities.

The proposal also creates a major technology challenge. Under a revolving model, borrowers can draw, repay and redraw within a sanctioned limit. A non-revolving structure must instead support multiple drawdowns while ensuring that repaid principal does not recreate borrowing capacity. NBFCs may consequently need changes to loan-management systems, repayment schedules, servicing, accounting, risk monitoring and reporting.

SwiffyLabs says its lending platform is already equipped for this construct. Its non-revolving credit-line capability allows multiple drawdowns within an approved sanction while preventing repaid principal from replenishing the sanctioned amount. The approach could help lenders adapt products without fundamentally redesigning customer journeys.

The capability may be particularly relevant to Loan Against Securities (LAS), where lenders must coordinate drawdowns with collateral valuation, exposure and risk controls. SwiffyLabs’ platform supports loan origination, loan management, collateral management and risk workflows, with LAS capabilities covering assets including shares, mutual funds, bonds and ESOPs.

SwiffyLabs also operates a modular, API-first BFSI technology platform, spanning Lending, Payments and SwiffyLabs Studios. Its lending stack includes LOS, LMS, collateral and risk-management capabilities, while its configurable architecture is designed to help financial institutions adapt products without large-scale technology redevelopment.

“Regulatory changes of this nature require lenders to rethink not just their product structures, but also the underlying technology,” said Vivek Sinha, VP Products, SwiffyLabs.

The final RBI directions will determine the proposal’s precise scope. For NBFCs, however, the consultation has already raised a fundamental question: how can lenders preserve flexible, multiple-drawdown customer experiences without operating revolving credit facilities? SwiffyLabs is positioning its non-revolving architecture as one technology-led answer.