The Reserve Bank of India (RBI) has issued new draft norms restricting (NBFCs) to offering only term loans, barring revolving credit products, and also deferred the implementation of revised recovery agent norms to January 2027.
January 2027
Recovery Norms Deadline
Original Deadline: January 2026→January 2027
⏳ Time Machine
How today’s news fits into the bigger picture
September 2018
IL&FS Crisis Exposes NBFC Risks
The default of Infrastructure Leasing & Financial Services (IL&FS) triggered a liquidity crisis across the NBFC sector, highlighting systemic risks and prompting the RBI to strengthen oversight and regulation of shadow banks.
October 2023
RBI Issues Guidelines on Digital Lending
The RBI released comprehensive guidelines for digital lending, aiming to curb unethical practices and enhance transparency, which included provisions for fair collection practices and grievance redressal mechanisms.
February 2025
Initial Recovery Agent Norms Announced
The RBI first announced revised guidelines for the engagement of recovery agents by banks and NBFCs, emphasizing their training and certification to ensure ethical conduct, with an initial implementation timeline.
March 2026
Concerns Over NBFC Product Complexity
Reports emerged expressing RBI's concerns over the increasing complexity and lack of transparency in certain credit products offered by NBFCs, particularly revolving credit lines, prompting a review of product categories.
July 2026
Industry Seeks Extension for Norms
Several financial industry bodies approached the RBI, requesting an extension for the implementation of the new recovery agent certification norms, citing practical difficulties in training and certifying a large workforce within the original deadline.
Today
RBI restricts NBFCs to term loans and delays new recovery agent norms to January 2027.
What happens next?
NBFCs will need to adjust product portfolios, and recovery agents will undergo certification to meet the new deadline.
The RBI has proposed significant changes for NBFCs, stating they can now only offer **term loans** and are prohibited from providing revolving credit products, with an exception for NBFCs authorized to issue credit cards. Simultaneously, the central bank has provided a reprieve by deferring the implementation of revised recovery agent norms to **January 2027**, giving regulated entities an additional year to certify existing recovery agents through the Indian Institute of Banking & Finance (IIBF). These moves aim to enhance transparency in lending practices and ensure a more structured approach to loan recovery.
💭 If you're wondering…
A term loan is a lump sum of money lent to a business or individual that must be repaid with interest over a fixed period, typically with regular, scheduled payments. It has a defined start and end date.
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