MUMBAI: RBI has proposed a sweeping overhaul of credit facility norms for non-banking financial companies, mandating a shift to term-loan structures while prohibiting most forms of revolving credit and removing provisions governing demand or call loans.According to draft directions issued by the central bank, NBFCs will be barred from offering revolving credit products and will be required to offer only credit facilities in the nature of term loans. The restriction will not apply to NBFCs that have been explicitly authorised by RBI to issue credit cards.The draft removes the regulatory framework for demand and call loans by deleting the section in RBI guidelines to NBFCs that deals with demand loans. In addition, the requirement that NBFCs maintain a board-approved policy for such loans has been withdrawn.The amendments introduce formal definitions to distinguish permissible and non-permissible credit facilities. A term loan has been defined as a fund-based credit facility with a fixed principal amount disbursed in one or more instalments, and repayable according to a predetermined amortisation schedule, either through periodic instalments or a bullet payment at maturity. The draft clarifies that once repaid, whether partially or fully, the sanctioned limit cannot be restored or replenished.
