RBI proposal to curb NBFCs' revolving credit may choke MSME funding
Reserve Bank's proposal to bar NBFCs from providing revolving credit will disrupt legitimate working-capital finance used by small and medium enterprises, industry body FISME said on Tuesday, as it urged the central bank to reconsider the plan.
The Federation of Indian Micro and Small and Medium Enterprises (FISME) has flagged concerns on the 'Draft Reserve Bank of India (Non-Banking Financial Companies Credit Facilities) Amendment Directions, 2026' issued earlier this month, saying a blanket ban on revolving credit by NBFCs may choke MSMEs' working capital.
In the draft, the Reserve Bank of India (RBI) has proposed that "NBFC shall only offer credit products which are in nature of term loans and shall not offer any revolving credit products".
The central bank has sought stakeholders' feedback on the draft till August 28, 2026.
FISME said that NBFCs play a critical role in serving enterprises, geographies, sectors and ticket sizes that are often not adequately served by banks.
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