News

RBI tightens gold loan rules: What changes in repayment, valuation, auction

The Reserve Bank of India (RBI) has changed gold loan regulations to improve transparency, protect borrowers, and regulate the market more strictly. No loans for gold purchases Under the new framework, banks and non-banking financial companies are prohibited from offering loans for the purchase of gold, including jewellery, coins, exchange traded fund (ETFs), or gold-backed funds. Loans cannot be granted against raw gold or silver, or financial products linked to them.

Gold loans surge as small borrowers shun MFIs: 122% jump in June, shows RBI data

Lower-income individuals are increasingly opting for gold loans over microfinance due to rising gold prices and stricter MFI lending norms. Gold-backed loans have surged by 122%, while microfinance loans have dropped significantly. Lower interest rates on gold loans and a cultural affinity for gold are also driving this shift, making gold loans a mainstream financial option.

Government of India has revised GST rates for multiple items pertaining to Ministry of Heavy Industries. It’s detailed clarifications is as follows:

Vehicle purchases are also credit-driven (NBFCs, banks, fintech lenders). A revival in auto sales will support retail loan growth, improve asset quality, and expand financial inclusion in semi-urban India.

RBI Finalizes Co-Lending Framework with Stricter Risk Sharing Rules, Effective January 2026

The Reserve Bank of India has issued its final co-lending guidelines for partnerships between banks and NBFCs, set to take effect from January 1, 2026. The regulations mandate that each lending party retain at least 10% of every loan on its books, ensure clear disclosure of roles to borrowers, and enforce borrower-level asset classification—so a default by one lender impacts both. Additional provisions include 15-day loan share reporting and a 5% cap on default loss guarantees for originating entities, enhancing transparency and accountability.

Indian Microfinance Sector Shifts Toward Sustainable Lending

As of August 18, 2025, India’s microfinance industry is undergoing a major strategic shift. Lenders are prioritizing portfolio stability and financial sustainability over aggressive disbursement, transforming lending practices amid a challenging economic backdrop

Time for NBFC stocks to shine again?

NBFCs are poised for a rebound following policy support from interest rate cuts and CRR reductions, expected to boost liquidity and credit growth. Relaxations for gold loan and microfinance NBFCs will further aid performance. Despite a weak start to 2025, recent policy measures have improved sentiment, potentially leading to a re-rating of NBFC stocks.

RBI Strengthens NBFC Regulations to Boost Transparency and Risk Management

The RBI has introduced enhanced regulations for NBFCs to strengthen governance, risk management, and operational transparency. The new guidelines focus on stricter norms for asset classification, provisioning standards, exposure limits, and board accountability, ensuring better financial discipline in the sector.

NBFCs Raise Concerns Over RBI's Draft Gold Loan Guidelines

Gold loan non-banking financial companies (NBFCs) have expressed apprehensions regarding the Reserve Bank of India's (RBI) proposed guidelines, particularly the cap on the loan-to-value (LTV) ratio. They warn that such measures could reduce loan disbursements and potentially push borrowers towards unregulated lenders. The Association of Gold Loan Companies (AGLOC) highlighted that the revised LTV norms might not serve customer interests.

RBI Eases Lending Norms, Boosting NBFCs' Access to Bank Credit

In a significant move to enhance liquidity in the NBFC sector, the Reserve Bank of India (RBI) has reduced risk weights on bank loans to NBFCs by 25 percentage points, effective April 1, 2025. This regulatory relaxation is expected to release approximately ₹40,000 crore in bank capital, potentially enabling an additional ₹4 lakh crore in credit availability. The decision aims to lower borrowing costs for NBFCs, particularly benefiting higher-rated entities. Following the announcement, major NBFC stocks, including L&T Finance and Shriram Finance, witnessed notable gains, reflecting positive market sentiment. Analysts suggest that while this move will improve funding access for NBFCs, the benefits may be more pronounced for those with stronger credit profiles. Overall, the RBI's initiative is seen as a strategic effort to bolster credit flow to the NBFC sector, thereby supporting broader economic growth.​

Indian NBFCs Adjust Funding Strategies Following RBI's Lending Norm Relaxation

In response to the Reserve Bank of India's recent relaxation of lending norms, Indian non-bank financial companies (NBFCs) plan to adjust their funding strategies in the upcoming fiscal year. The RBI reduced risk weight requirements for consumer microfinance loans to NBFCs by 25 percentage points, freeing up capital for banks and encouraging increased financing to these entities. This change is expected to make bank funding more attractive for NBFCs, which have been relying on short-term commercial papers due to previous bank loan shortages. The transition to a new funding mix is anticipated to take six to nine months, depending on RBI guidelines and bank preferences. ​

FIDC Urges Government to Establish Liquidity Facility for Priority Sector Lending

The Finance Industry Development Council (FIDC), representing India's NBFCs, has requested the government to create a refinance or liquidity facility to enhance lending to priority sectors such as agriculture, small and medium enterprises, and renewable energy. This proposal was part of their pre-budget memorandum to Finance Minister Nirmala Sitharaman. The FIDC noted that, despite the sector's reduced dependency on bank borrowings, many small- and mid-sized NBFCs still face liquidity challenges and must borrow at higher costs from larger peers. They also suggested increasing the borrowing limit from the current 5% to at least 10% of the total priority sector lending by banks to ensure better credit flow to these crucial sectors.

NBFCs Adapt to Regulatory Changes and Expand Funding Sources

The Non-Banking Financial Company (NBFC) sector in India is adapting to new regulatory challenges and market shifts. Due to the Reserve Bank of India's (RBI) decision to raise risk weights on bank borrowings for NBFCs, these companies are increasingly diversifying their funding strategies. This shift is leading NBFCs to explore bond markets and debenture issues to meet their funding needs​

Gold Loan Demand Remains Strong

Despite curbs on cash disbursements, NBFCs specializing in gold loans continue to see strong demand, supported by favorable movements in gold prices. This trend has helped gold loan NBFCs maintain growth in the current financial environment​

Funding Constraints for NBFCs

According to ICRA, after two years of strong growth, NBFCs are expected to face significant challenges due to funding constraints. The sector's assets under management (AUM) are projected to exceed ₹50 trillion in the current financial year, but further expansion may be hindered due to limited access to funds

NBFC Growth Challenges

Reports indicate that NBFC growth may face hurdles as banks are becoming more reluctant to fund these institutions. As of September 2023, banks accounted for 37.8% of NBFC borrowings, but this reliance is becoming a potential risk​

RBI Tightens HFC Norms

The Reserve Bank of India (RBI) has introduced stricter regulations for Housing Finance Companies (HFCs) to align them more closely with NBFCs. The ceiling on public deposits that HFCs can hold has been reduced from three times to 1.5 times their net owned fund. Additionally, HFCs will now need to maintain a higher percentage of liquid assets against public deposits​

Self-Regulatory Organizations (SROs)

The RBI is inviting applications for the recognition of two Self-Regulatory Organizations (SROs) within the NBFC sector. This move aims to enhance self-regulation within the industry, promoting better standards and practices​

Regulatory Updates:

The Reserve Bank of India (RBI) has released its updated list of NBFCs classified under the upper layer (NBFC-UL) as part of its scale-based regulation framework. This classification involves stricter regulatory oversight due to the systemic importance of these companies. The list includes major players like LIC Housing Finance, Bajaj Finance, Shriram Finance, and others​

Budget 2024: Implications for NBFCs and MSMEs

The upcoming Union Budget 2024 has generated significant interest among industry stakeholders, particularly regarding support for NBFCs and the Micro, Small, and Medium Enterprises (MSME) sector. Shachindra Nath, MD of UGRO Capital, emphasized the importance of addressing challenges faced by NBFCs to bolster MSME support. Nath advocated for creating a new category of NBFCs dedicated to Priority Sector Lending (PSL), which would focus 85% of their assets under management on the priority sector. This proposal aims to enhance funding avenues for MSMEs and streamline financial support​.

Regulatory Developments and Strategic Investments

The regulatory landscape for NBFCs has seen notable changes. The Reserve Bank of India (RBI) continues to refine its regulatory framework, emphasizing the interconnectedness of banks and NBFCs, which poses systemic risks. To mitigate these risks, the RBI has proposed strong regulatory standards and is inviting applications for self-regulatory organizations (SROs) within the NBFC sector​

Challenges and Opportunities

Despite the positive trends, NBFCs face ongoing challenges, particularly in regulatory compliance and funding. The sector's interconnectedness with banks necessitates stringent oversight to prevent systemic risks. The RBI's push for SROs aims to enhance self-regulation and ensure adherence to best practices within the industry. Opportunities for growth are abundant, especially with the government's focus on MSMEs and infrastructure development. The anticipated policy measures in the Union Budget 2024, such as the potential reintroduction of the Partial Credit Guarantee Scheme (PCGS) for NBFC-MSMEs, could significantly bolster the sector. This scheme would provide a portfolio guarantee for the purchase of bonds or commercial papers issued by NBFC-MSMEs, thereby enhancing their access to funding​

Conference for Non-Banking Financial Companies' (NBFCs') Heads of Assurance Departments

The Chief Compliance Officers, Chief Risk Officers, and Heads of Internal Audit of a select group of Non-Banking Financial Companies (NBFCs) attended a conference today in Mumbai hosted by the Reserve Bank. Approximately 280 people, representing more than 100 NBFCs, attended the conference. This seminar, themed "Resilient Financial System - Role of Effective Assurance Functions," is one of the supervisory engagements that the Reserve Bank has been holding with its Regulated Entities over the past year. Earlier in January 2024, the Conference for the Heads of Assurance Functions of Scheduled Commercial Banks took place as part of this series.

With co-lending AUM approaching ₹1 lakh crore, NBFC expects medium-term growth of 35–40%

Five years after the co-lending model's inception, assets managed by NBFCs are getting close to ₹1 trillion in value. According to a note from Crisil, "growth momentum is seen healthy at 35-40 per cent annually over the medium term, amidst rising interests of partners – NBFCs and banks." It also added that, given the higher risk weights associated with personal loans, these partners are likely to increase their focus on other asset classes, like MSME and home loans.

Loan and deposit rates are increased by banks and NBFCs while the RBI promotes monetary transmission.

The central bank has recently demanded that banks and NBFCs receive a greater transmission of monetary policy in the form of rate increases. Transmission is crucial to the RBI's ability to control inflation.

As risk aversion sets in, small NBFCs may resort to SME, mortgage, and green financing loans in the co-lending market.

According to data from CRISIL and a few NBFC executives, co-lending to personal loans would decline this year. RBI's shifting risk weights for consumer and personal loans are making banks and NBFCs take a closer look at MSMEs.

Diversifying the funding strategy of NBFCs is necessary.

Investors will be more confident in the government's proposal to establish a ₹300 billion backstop fund to offer liquidity during difficult times. In addition to being big NCD subscribers, banks have been leading the charge in providing loans to NBFCs. Mutual funds, corporate treasuries, insurance firms, pension and provident funds, and others are also investors. Mutual, pension, and provident funds, on the other hand, feel more at ease investing in higher-rated papers in the AA and AAA categories. Investor confidence will rise as a result of the government's proposal to establish a ₹300 billion backstop fund to supply liquidity during difficult periods. This will also stabilize the market.

NBFC-P2Ps minimize risks; certain business activities defy accepted standards

According to Reserve Bank of India Deputy Governor M Rajeshwar Rao, some NBFC-P2P (peer-to-peer) lenders' business practices don't seem to be in compliance with regulatory standards, and these lenders have been downplaying certain business risks. Additionally, he rebuffed the NBFCs' persistent calls to become banks, stating that it is unusual for them to desire to become like banks because NBFCs have developed into specialty businesses fulfilling particular economic responsibilities.

The head of RBI notes unusual increases in personal loans and exposure to NBFCs.

Due to the RBI's requirement to do liquidity infusion/absorption procedures often twice a day, liquidity risk management also becomes extremely important. The chiefs of public sector banks and a few private sector banks were briefed by RBI top brass on a number of important problems, including the anomalous growth in personal loans and exposure to non-banking financing firms (NBFCs).

RBI might loosen evergreening requirements for AIFs with strategic importance

The Reserve Bank of India may carve out funds that are strategically significant from the limitations set by the December evergreening circular. This could include any new funds that the government launches in the future or deems to be "strategically important," as well as NIIF funds, SIDBI Fund of Funds, SBICap Venture's Self Reliant India Fund (SRI), and SWAMIH Investment Fund (SIF).

RBI deputy governor flags business risks for NBFCs

Addressing a NBFC summit organised by the Confederation of Indian Industry (CII) Rao said though total assets of NBFCs have increased to 18.7% of the banking sector assets from 13% a decade ago, there are certain risks in their business models or balance sheets which need to be monitored for necessary actions.

Why a new NBFC as guarantor for lower-rated infra bonds won’t help

The introduction of another government-backed NBFC raises concerns about the redundancy of such entities and their questionable effectiveness. Infrastructure finance can be raised much better through market-based mechanisms

RBI deputy governor Rajeshwar Rao cautions NBFCs on P2P lending practices

The Reserve Bank of India (RBI) deputy governor M Rajeshwar Rao has cautioned non-banking finance companies (NBFCs) on peer-to-peer lending, saying the regulator has observed certain business practices that do not appear to be in line with its guidelines. Any breach of licensing conditions and regulatory guidelines is non-acceptable, he said. The warning comes days after the RBI imposed business restrictions on Paytm Payments Bank.

Nitstone Finserv announces TCS as Technology Partner

Nitstone Finserv to raise ₹150 crore for Growth

Bangalore-based non-banking finance company, Nitstone Finserv plans to raise fresh funding of ₹150 crore from new investors.

Business Today: Nitstone Finserv Hires Ex-Foreign Banker as Strategic Finance Head

Nitstone Finserv, a Bangalore-headquartered NBFC, which focuses on digital and physical lending platform facilitating quick and hassle-free loans, has appointed Mr. Bosco Caldeira as its Senior Vice President - Head of Strategic Finance and Global Alliances.

Nitstone Finserv Opens its First Retail Branch

Nitstone Finserv, a Bengaluru - India headquartered NBFC, announced today the opening of its first retail branch. With this endeavour, Nitstone is focusing on improving its professional efficiency by providing services both online and offline and aiming to provide the best customer experience at the branch.

Nitstone Finserv Ropes in New Directors

Nitstone Finserv, a digital lending platform which facilitates quick and hassle-free loans has obtained approval to start operations of NBFC Business in India. The firm has announced appointment of 3 new independent Directors to the Board of Directors; Thomas T. Riley, Alok Kumar Misra and Vishwanath Prasad Singh.

Nitstone Finserv to Commence NBFC Operations

Nitstone Finserv announced today that they got RBI approval to operate NBFC, which will help promote inclusive growth in the country, by catering to the diverse financial needs of various segments of the society. Headquartered in Bengaluru, Nitstone plans to commence business in Bengaluru, followed by branches in Pune, Hyderabad, Chennai during the current financial year and has a nationwide expansion plan in coming years.

It's booming biz for India's NBFCs

Indian banks' struggles with bad loans over the past three years have opened an opportunity to ramp up lending for so-called non-banking financial companies (NBFC's), which are not as strictly regulated as banks. With their share of total credit rising, new players and new investors have piled into the NBFC market.

Big PE's, NBFC's eye low-cost housing

Large private equity firms and non-banking finance companies are now getting interested in affordable housing, thanks to the government’s recent incentives for this segment, including infrastructure status and speedy approvals. This segment was financed by funds with smaller ticket size which specialized only in affordable housing.

Why foreign bankers rush for NBFC jobs?

India may be talking of job creations, but the country's top financial services companies, including Motilal OswalBSE 1.31 %, IIFL, EdelweissBSE 1.14 % and CentrumBSE 1.77 %, have tapped top to mid-level foreign bankers to boost their wealth and asset management businesses this year. The so-called foreign bank jobs are no more the flavour of the day.

RBI issues rules for NBFCs

The Reserve Bank of India has issued 'know your customer' guidelines for non-banking financial companies, which are similar to those for commercial banks. The board of directors of NBFCs have been advised to formulate policies and procedures to operationalize and ensure the observance of these guidelines, which come into immediate effect, in respect of all new customers, the bank said.

RBI tightens norms for NBFCs

In a bid to bring non-banking financial company (NBFC) norms in line with those of banks, the Reserve Bank of India (RBI) on Monday unleashed tighter rules for NBFCs. According to the new guidelines, NBFCs will require higher minimum capital, have less time to declare bad loans, and a board-approved fit and proper criteria for director appointments.