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Corporate Laws Central Ministry of Finance Reserve Bank of India Act, 1934

Reserve Bank of India (Non-Banking Financial Companies - Credit Risk Management) Directions, 2025

28-Nov-2025 | RBI/DOR/2025-26/350 DOR.CRE.REC.No.269/07-02-008/2025-26

RBI has issued Reserve Bank of India (Non-Banking Financial Companies - Credit Risk Management) Directions, 2025, effective from 28th Nov 2025. Applicability: These Directions shall applicable to the NBFC-D, NBFC-ICC, NBFC-Factor, NBFC-MFI, NBFC-IFC, IDF-NBFC, and HFCs (layer-wise). Key Highlights: - NBFCs must maintain comprehensive Board-approved policies covering Credit appraisal and evaluation standards, Lending to directors, senior officers, and related parties, CDS usage, LEI compliance, and CERSAI filings. - Credit Risk Evaluation (Applicable to Notified NBFCs) Includes NBFC-Factors, NBFC-D, and NBFCs with asset size Rupees 500 crore or above must have Independent credit appraisal; no reliance on borrower's consultants, Sensitivity and scenario analysis (especially infrastructure), Verification of directors defaulter status (DIN/PAN checks), Ensure promoter equity is not financed through debt/multiple leveraging, and Auditor certification may be used for end-use monitoring but not as a substitute for NBFC due diligence. - Regulatory Restrictions on Loans and Advances: 1. NBFC-ML and Above- Loans to Directors/Relatives/Firms/Companies: Loans of Rupees 5 crore or above require Board/Committee approval. Directors must disclose interests and recuse from voting. 2. NBFC-BL- Must have a Board-approved policy for loans to directors, senior officers, and their related entities, with a threshold for reporting. 3. Prohibited Activities- Lending against own shares and Lending against own debentures (except tax-exempt bonds). - NBFCs may only buy CDS protection to hedge credit risk on corporate bonds. - Legal Entity Identifier (LEI) Requirements: 1. Non-individual borrowers with aggregate exposure of Rupees 5 crore or above must obtain LEI. 2. No sanction/renewal/enhancement of facilities allowed for borrowers without LEI. 3. Government departments/agencies are exempt. For more information, kindly refer to the attached document.

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