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Bajaj Finance, peers seek RBI rethink on proposed revolving-credit curb

Our read

RBI is likely to retain tighter guardrails but allow enough transition flexibility for major NBFCs to shift revolving borrowers into costlier fixed-tenure and bank-partnered products.

For operators

Retailers should diversify checkout-finance partners and prepare for higher customer borrowing costs if RBI curbs constrain NBFC revolving-credit products.

Watch

RBI consultation response, final circular language, implementation date, and any exemptions for MSME, co-lending, or legacy portfolios.

The report,

Bajaj Finance, Tata Capital and other NBFCs will ask RBI to reconsider a proposed ban on revolving credit products, warning it could disrupt over Rs 2 lakh crore of MSME and consumer lending, raise borrower costs and favour banks.

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Reported figures

From the report. Source details below

Draft directions issued August 6, 2026
NBFC representatives met August 14

Also in the report

  • 15-20% annual market growth
  • Nearly 90% of lending serves MSMEs and individuals
  • Market expected to nearly double over the next four years

Why it matters to operators and investors

Financial-services and retail platforms should evaluate bank partnerships or acquisitions that preserve flexible consumer and MSME credit access if NBFC-led revolving finance is restricted.

What to watch next

  • Management commentary from Bajaj Finance, Tata Capital and peers on revolving-credit book size, expected repricing, and originations impact.
  • Changes in merchant checkout approval rates, EMI conversion, average ticket size, and financing penetration during major retail sales periods.
  • Bank announcements on credit-card, personal-loan, supply-chain-finance, and co-lending expansion.
  • Evidence of rising consumer borrowing costs, lower unsecured-loan disbursals, or delinquency migration as lenders change product structures.

Likely next moves

Our read of what comes next — analysis, not reported by the source.

  • Bajaj Finance, Tata Capital and other NBFCs intensify representation through industry bodies, emphasizing MSME credit disruption and potential demand slowdown.
  • Large NBFCs review revolving-credit portfolios, tighten eligibility criteria, and prepare pricing increases or limits reductions ahead of final rules.
  • Retailers and e-commerce platforms expand bank partnerships, no-cost EMI arrangements, and merchant-funded discounts to protect checkout conversion.
  • Banks pursue co-lending and distribution partnerships with NBFCs to capture customer acquisition flow without fully building merchant ecosystems.
  • Consumer-facing lenders increase focus on fixed-tenure personal loans, durable-finance EMIs and secured lending as substitutes for revolving lines.

The counter-case

The case against this reading — not reported by the source.

The industry warning may be self-interested lobbying: tighter revolving-credit rules could curb high-yield, higher-risk unsecured lending rather than broadly deny viable borrowers credit. Any shift toward banks may be intentional if RBI sees NBFC funding structures, underwriting or customer disclosures as needing stronger safeguards. Borrowing costs need not rise materially if lenders replace revolving lines with term loans or improve risk-based pricing.

The source

Source Read the source at ET Small Business

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