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

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

28-Nov-2025 | RBI/DOR/2025-26/362 DOR.MCS.REC.No.281/01-01-039/2025-26

RBI has issued RBI (Non-Banking Financial Companies - Responsible Business Conduct) Directions, 2025 effective from 28th November 2025. Key Highlights: 1. Applicability - All major categories of NBFCs (NBFC-D, ICC, MFI, IFC, HFC, etc.) must comply, except CICs, Account Aggregators, Mortgage Guarantee Companies, Standalone PDs, and NBFCs without customer interface. 2. Fair treatment of all borrowers - Communication must be in a language understood by customers; loan application forms must be transparent; borrowers must receive copies of loan agreements; and all terms (interest, charges, penal amounts) must be disclosed upfront. 3. Transparent loan sanction, disbursement and changes - NBFCs must inform borrowers in advance of any change in interest rates, charges, or terms. Securities must be released promptly after loan closure, and borrowers must receive proper notice before repossession. 4. Key Facts Statement (KFS) - For all retail and MSME term loans, a standard KFS must be provided showing APR, all charges, amortisation schedule, and validity period. No charge not included in the KFS can be levied later. 5. Penal charges - Penal charges cannot be added as "penal interest", cannot be capitalised, and must be reasonable. They can only be applied on the overdue amount and must follow a Board-approved policy. 6. Strict rules on pre-payment charges - No pre-payment charges for floating-rate loans to individuals for non-business purposes. Further exemptions apply for MSEs and certain NBFC layers. Pre-payment terms must be disclosed upfront. 7. Strong protections for gold/silver-loan - NBFCs must follow standardised assaying, valuation, storage, documentation, auction processes, and compensate borrowers for delays or loss of collateral. Auctions must be transparent, publicly notified, and exclude NBFC participation. For more information, please refer to the attached document.

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