RBI NBFC Revolving Credit Plan Faces MSME Pushback

The Federation of Indian Micro and Small and Medium Enterprises (FISME) has raised concerns over the Reserve Bank of India’s proposal to prohibit NBFCs from offering revolving credit facilities, warning that a blanket ban could disrupt legitimate working-capital financing for MSMEs. RBI’s draft Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Amendment Directions, 2026 proposes that NBFCs should offer only credit products that are in the nature of term loans and should not provide revolving credit products. Stakeholders can submit feedback until August 28, 2026. FISME Secretary General Anil Bhardwaj said concerns over indefinite rollovers, hidden borrower stress and risky app-based lending are understandable. However, he argued that productive working-capital finance for businesses is different from consumer revolving credit. FISME has urged RBI to regulate risks through stronger underwriting, monitoring, transparent disclosures and data-governance requirements instead of imposing a blanket ban. Stock Market Impact: The proposal could be negative for NBFCs with significant exposure to MSME and revolving working-capital loans, as they may face product restructuring, higher compliance costs and possible pressure on loan growth and fee income. NBFCs with diversified loan books and limited dependence on revolving credit may see relatively lower impact. MSME-focused lenders could remain under pressure until RBI clarifies the final framework. The final RBI directions and any exemptions for genuine MSME working-capital facilities will be key factors for investors.