Non-banking finance companies (NBFCs) have to restrict their lending activity only to term loans and cannot offer “revolving credit” products, per RBI’s draft guidelines in this regard.However, the aforesaid restriction shall not be applicable to an NBFC authorised by Reserve Bank to issue credit cards, according to Draft Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Amendment Directions, 2026.A “revolving credit” refers to any fund based credit facility, which does not meet the definition of a term loan.A “term loan” refers to a fund based credit facility of a fixed principal amount, made available by an NBFC to a borrower. It has features such as the sanctioned limit is disbursed in one or more instalments and is repayable in accordance with a predetermined amortization schedule, either as periodic instalments or as a bullet on the stated due date(s) and once disbursed, the sanctioned limit cannot be restored / replenished upon repayment of either the whole or a part of the principal amount.The central bank has invited comments/feedback on the draft Amendment Directions rom regulated entities and other interested stakeholders by August 28, 2026.Published on August 7, 2026