Major NBFCs like Bajaj Finance are replacing flexible revolving credit lines with term-loan structures to align with a draft RBI proposal from August 2026. This move transitions products from reusable credit limits to fixed repayment schedules, potentially impacting assets under management and profit margins. Investors are closely monitoring how this portfolio restructuring affects customer retention and operational costs.
Non-banking financial companies (NBFCs) in India are rapidly re-engineering their lending portfolios to prepare for a regulatory shift regarding revolving credit facilities. The push follows a draft proposal released by the Reserve Bank of India in August 2026, which suggests that only authorized credit card issuers should provide revolving credit lines. Under these proposed guidelines, lenders would be required to shift from products where borrowers can repay and redraw funds, to term-loan structures where the principal cannot be replenished once repaid.
Major players are acting early to mitigate potential regulatory risk. Bajaj Finance has been among the most proactive, confirming the launch of new term-loan variants effective November 1, 2026. These new products remove the withdrawal functionality inherent in their legacy flexi-credit lines, ensuring compliance with the central bank’s preference for transparent term-loan maturity profiles. Management at the firm has acknowledged that these changes may lead to a temporary impact on its assets under management and a modest compression in net interest margins as the transition takes hold.
Tata Capital is also adapting its product suite, currently piloting modified flexi-loan products. The focus is on converting a significant portion of its flexi-credit portfolio—which primarily serves micro, small, and medium enterprises—into non-revolving structures. While the interest rates are expected to remain aligned with previous offerings, the structural change represents a fundamental shift in how these loans operate for the end borrower.
The industry, however, is not facing a uniform disruption. According to industry estimates, revolving credit facilities account for approximately ₹2 lakh crore out of a total NBFC loan book estimated at ₹30 lakh crore. This indicates that while the regulatory impact is significant for specific product categories, it is not an industry-wide overhaul. Other lenders, including Aditya Birla Capital, Cholamandalam Investment and Finance Company, and Shriram Finance, have reported relatively lower exposure, as their current portfolios are more heavily concentrated in supply-chain financing and dealer trade advances rather than consumer-facing revolving credit.
For investors, the key monitorables center on how this transition affects customer behavior and operational costs. While firms are prioritizing compliance to avoid future regulatory friction, the shift to term-loan models could alter competitive dynamics, as borrowers who rely on the flexibility of revolving credit may seek alternative sources. The final financial impact will depend on the speed of implementation, the ability of lenders to retain their customer base with the new product structures, and the final text of the RBI guidelines when they are formally issued.