Reserve Bank of India Deputy Governor Shirish Chandra Murmu said draft guidelines on revolving credit are intended to provide clarity rather than create new regulations [1].
The move comes as the central bank seeks to strengthen risk controls across non-banking financial companies (NBFCs) without stifling the growth of credit products. By refining these rules, the RBI aims to ensure that financial institutions maintain strict compliance, and continue to serve their customers.
Murmu said that the guidelines are designed to improve compliance and provide a clearer framework for how revolving credit is handled [1]. He said that the process is collaborative, as the RBI is currently seeking feedback from NBFCs to ensure the rules are practical and effective [2, 3].
The central bank is focusing on the intersection of risk management and business operations. The goal is to bring greater clarity to revolving-credit products and strengthen overall risk controls [2, 3]. This effort is meant to prevent systemic vulnerabilities while allowing the credit market to function efficiently.
Addressing concerns that stricter oversight might slow down lending, Murmu said, "RBI regulations will not come in the way of business activity" [1].
The RBI officials have met with heads of NBFCs to discuss the draft guidelines and the specific requirements for compliance [2]. These discussions are part of a broader effort to align industry practices with the central bank's risk appetite, and regulatory expectations [3].
“"RBI regulations will not come in the way of business activity."”
The RBI is attempting to balance financial stability with economic growth. By framing these guidelines as 'clarifications' rather than 'new regulations,' the central bank is signaling to the market that it wants to tighten oversight of revolving credit—which can be prone to instability if mismanaged—without triggering a credit crunch or causing panic among non-banking financial companies.
