NBFCs may no longer be able to offer line-of-credit facilities against collateral
FinTech BizNews Service
Mumbai, 7 August, 2026: There has been a significant Regulatory Shift for the NBFC sector. Jugal Mantri, ED & CEO Anand Rathi Global Finance, shares insightful thoughts on the development:
The RBI’s proposal represents a significant regulatory shift for the NBFC sector, with the impact likely to be largely dampening for borrowers. The proposed changes could reduce the flexibility available to borrowers, particularly those who rely on credit lines backed by collateral for their short-term or working capital requirements.
NBFCs may no longer be able to offer line-of-credit facilities against collateral. While this may bring greater regulatory consistency, it could also take away an important flexibility from borrowers. At the same time, it could place banks at an advantageous position, potentially creating an uneven playing field between banks and NBFCs.
The impact could also be significant for the rapidly growing fintech and digital lending ecosystem. Several fintech and digital lenders currently offer unsecured credit lines, often charging relatively high processing fees and other charges for setting up such facilities. The RBI’s proposed move could put pressure on these lenders and potentially affect business models built around flexible, easily accessible credit-line products.
Personally, I believe the RBI should consider allowing NBFCs to continue offering line-of-credit and working capital facilities against tangible securities such as properties or listed securities, while restricting them from offering unsecured lines of credit. This would allow borrowers to retain flexibility while ensuring that lending remains adequately backed by tangible collateral, and could also help maintain a more level playing field between banks and NBFCs.
