Reserve Bank of India (Non-Banking Financial Companies – Responsible Business Conduct) Directions, 2025

RBI/DOR/2025-26/362
DOR.MCS.REC.No.281/01-01-039/2025-26
November 28, 2025

Previous Versions

Reserve Bank of India (Non-Banking Financial Companies – Responsible Business Conduct) Directions, 2025 (Updated as on July 1, 2026)

Table of Contents

Chapter I – Preliminary

A. Short Title and Commencement
B. Applicability
C. Definitions

Chapter II – Institutional Framework

A. Role of Board

Chapter III – Responsible Lending Conduct

A. Fair Practices Code for NBFCs
B. Key Facts Statement for Loans & Advances
C. Penal Charges in Loan Accounts
D. Reset of Floating Interest Rate on Equated Monthly Instalments (EMI) based Personal Loans
E. Pre-payment charges on loans
F. Release of Movable / Immovable Property Documents on Repayment / Settlement of Personal Loans
G. Conduct related aspects in Lending Against Gold and Silver Collateral
H. Guidelines on conduct towards Microfinance borrowers
I. Responsibilities of Direct Sales Agents (DSA) / Direct Marketing Agents (DMA) / Recovery Agents of the NBFC

Chapter IV – Miscellaneous

A. Need for public notice before closure of the branch/office
B. Rounding off of transactions to the Nearest Rupee
C. Provision of Safe Deposit Locker Facility by NBFCs
D. Compliance with Hon’ble Supreme Court Order dated April 30, 2025 in the matter of Pragya Prasun and Ors. vs Union of India and Ors. (W.P.(C) 289 of 2024) and Amar Jain vs Union of India and Ors. (W.P.(C) 49 of 2025)
E. Measures in case of declaration of calamity

Chapter V – Repeal and Other Provisions

A. Repeal and saving
B. Application of other laws not barred
C. Interpretations

Annex I – Key Facts Statement
Annex II – Lending against collateral of Gold Jewellery

In exercise of the powers conferred by sections 45JA, 45L and 45M of the Reserve Bank of India Act, 1934 and all other provisions / laws enabling the Reserve Bank of India (hereinafter called the Reserve Bank) in this regard, the Reserve Bank being satisfied that it is necessary and expedient in public interest so to do, hereby, issues these Directions.

Chapter I – Preliminary

A. Short Title and Commencement

1. These Directions shall be called the Reserve Bank of India (Non-Banking Financial Companies – Responsible Business Conduct) Directions, 2025.
2. These Directions shall become effective from the date of issuance unless indicated otherwise.

B. Applicability

3. These Directions shall be applicable to following Non-Banking Financial Company (hereinafter collectively referred to as 'NBFCs' and individually as an 'NBFC'), for all layers, unless specified otherwise:

• NBFC-D registered with the RBI under the provisions of the RBI Act, 1934;
• NBFC-ICC registered with the RBI under the provisions of the RBI Act, 1934;
• NBFC-Factor registered with the RBI under the provisions of the Factoring Regulation Act, 2011;
• NBFC-MFI registered with the RBI under the provisions of the RBI Act, 1934;
• NBFC-IFC registered with the RBI under the provisions of the RBI Act, 1934;
• IDF-NBFC registered with the RBI under the provisions of the RBI Act, 1934;
• HFC registered with the RBI under the provisions of the NHB Act, 1987;

4. The provisions contained in Paragraph 98 to Paragraph 100 shall be applicable for NBFC-P2P registered with the RBI under the provisions of the RBI Act, 1934;
5. These Directions are not applicable for the following:

• Mortgage Guarantee Company registered with RBI under the scheme of Registration of Mortgage Guarantee Companies;
• Core Investment Company registered with the RBI under the provisions of the RBI Act, 1934;
• NBFC-Account Aggregator registered with the RBI under the provisions of the RBI Act, 1934;
• Standalone Primary Dealer registered with the RBI as NBFCs under the provisions of the RBI Act, 1934;
• Non-Operating Financial Housing Company registered with the RBI as NBFC under the provisions of the RBI Act, 1934;
• NBFCs not having any customer interface.

Note: The applicability under these Directions is in line with the regulatory structure for NBFCs as set out in Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Directions, 2025.

C. Definitions

6. In these Directions, unless the context states otherwise, the terms herein shall bear the meaning assigned to them below: (1) Annual Percentage Rate (APR) means the annual cost of credit to the borrower which includes interest rate and all other charges associated with the credit facility. (2) Consumer Credit refers to the loans given to individuals, which consists of

• loans for consumer durables,
• credit card receivables,
• auto loans (other than loans for commercial use),
• personal loans secured by gold, gold jewellery, immovable property, fixed deposits (including FCNR(B)), shares and bonds, etc., (other than for business / commercial purposes),
• personal loans to professionals (excluding loans for business purposes), and
• loans given for other consumptions purposes (e.g., social ceremonies, etc.).

However, it excludes (a) education loans, (b) loans given for creation / enhancement of immovable assets (e.g., housing, etc.), (c) loans given for investment in financial assets (shares, debentures, etc.), and (d) consumption loans given to farmers under KCC. (3) Eligible Collateral shall have the same meaning as defined in Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Directions, 2025. (4) Equated Periodic Instalments (EPI) mean an equated or fixed amount of repayments, consisting of both the principal and interest components, to be paid by a borrower towards repayment of a loan at periodic intervals for a fixed number of such intervals; and which result in complete amortisation of the loan. EPIs at monthly intervals are called EMIs. (5) Jewellery shall have the same meaning as defined in Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Directions, 2025. (6) Key Facts of a loan agreement between an NBFC / a group of REs and a borrower are legally significant and deterministic facts that satisfy basic information required to assist the borrower in taking an informed financial decision. (7) Key Facts Statement (KFS) is a statement of key facts of a loan agreement, in simple and easier to understand language, provided to the borrower in a standardised format. (8) Loan to Value (LTV) ratio shall have the same meaning as defined in Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Directions, 2025. (9) Microfinance loan shall have the same meaning as defined in Reserve Bank of India (Non-Banking Financial Companies – Microfinance Institution) Directions, 2025 (10) Ornaments shall have the same meaning as defined in Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Directions, 2025. (11) Personal Loans, as referred in Sections D & F of Chapter III, shall have the same meaning as defined in XBRL Returns – Harmonization of Banking Statistics dated January 04, 2018, as amended from time to time. (12) Regulated Entities (REs), for the limited purpose of this Direction, shall mean (i) Scheduled Commercial Banks (SCBs) / Regional Rural Banks (RRBs) / Local Area Banks (LABs) / All Primary (Urban) Co-operative Banks (UCBs) / State and Central Co-operative Banks (StCBs / CCBs) / Small Finance Banks, Payment Banks and any other entity which has been licenced under Section 22 of Banking Regulation Act, 1949 (ii) All India Financial Institutions (AIFIs) (iii) Non-Banking Finance Companies and Housing Finance Companies

Chapter II – Institutional Framework

A. Role of Board

7. An NBFC shall have Board approved policies and review mechanisms in place to ensure responsible business conduct. An illustrative list of Board approved policies and the aspects to be covered thereunder are detailed in the paragraphs below.

A.1 Board approved policies

(1) Fair Practices Code, which shall preferably be in the vernacular language, or a language as understood by the borrower. (2) Grievance redressal mechanism
Note: The grievance redressal mechanism shall ensure that all disputes arising out of the decisions of the functionaries are heard and disposed of at least at the next higher level. (3) Appropriate internal principles and procedures in determining interest rates and processing, penal and other charges.
Note: The guidelines indicated in the Fair Practices Code about transparency in respect of terms and conditions of the loans shall also be considered. (4) Lending against gold and silver collateral (5) Fair Practices Code for lending to microfinance borrowers (6) Policy on reset of floating rate personal loans including option to borrowers for switch between fixed and floating interest rates (7) Engagement of recovery agents (8) Code of Conduct for DSA / DMA / Recovery Agents