Current · Source: Reserve Bank of India · RBI/2007-08/158 · issued 10 Oct 2007 · ~1 min read
Quick answerRBI mandates NBFCs to provide borrowers with a copy of the loan agreement and all enclosures at sanction/disbursement. This aims to prevent disputes over terms like interest rates.
The rule, in the simplest words
NBFCs (companies that give loans but are not banks) must give borrowers a full copy of the loan agreement and all attached papers when the loan is approved or given.
This rule stops fights about loan terms like interest rate (the extra money you pay to borrow) because the borrower gets everything in writing.
Borrowers must get the agreement copy even if they signed it, and NBFCs must keep proof that they gave it.
How it plays out — a real example
An NBFC compliance officer in Indore, Priya, now prints the full loan agreement and all its attachments for every customer. When Mr. Sharma takes a loan against his gold chain, she hands him the papers right at the counter and asks him to sign an acknowledgment. This way, Mr. Sharma knows his interest rate and repayment terms clearly, and Priya avoids any future disputes or penalties from the RBI.
What changed
Earlier guidelines required NBFCs to convey loan terms in writing, but RBI observed that borrowers often lacked full awareness of terms. Now, NBFCs must invariably furnish a complete copy of the loan agreement and all enclosures to borrowers at the time of sanction or disbursement.
What it means for you
NBFCs must update their loan disbursement processes to ensure every borrower receives a physical or digital copy of the signed agreement and all referenced documents. This reduces legal disputes and enhances transparency, but increases operational costs for document management. Lenders should audit current practices to avoid non-compliance penalties.
What you must do
Update loan sanction workflows to include automatic generation and delivery of loan agreement copies with all enclosures.
Train loan officers to hand over or send the agreement copy at the time of sanction/disbursement and obtain acknowledgment.
Review existing loan documentation to ensure all enclosures quoted in agreements are included in the copy provided to borrowers.
Implement a system to track delivery of agreement copies to borrowers for audit and compliance purposes.
Who it affects
All Non-Banking Financial Companies (NBFCs), Residuary Non-Banking Companies (RNBCs), Borrowers of NBFCs
❓ Common questions
What documents must be provided to the borrower?
A copy of the loan agreement along with a copy of each enclosure quoted in the agreement must be furnished at the time of sanction or disbursement.
Why did RBI issue this guideline?
RBI found that borrowers were often unaware of loan terms, especially interest rates, because NBFCs did not provide details or borrowers had no time to review the full agreement, leading to disputes.
Does this apply to all types of loans from NBFCs?
Yes, the guideline applies to all loans sanctioned by NBFCs and RNBCs, as per the circular.
📜 Read the original circular — full text as issued by RBI
RBI/2007-08/158
DNBS.PD/ CC. No. / 03.10.042 /2007-08
October 10, 2007
All Non-Banking Financial Companies
(including Residuary Non-Banking Companies)
Dear Sir,
Guidelines on Fair Practices Code for Non-Banking Financial Companies
Please refer to our Company Circular DNBS (PD) CC No. 80 / 03.10.042 / 2005-06 dated September 28, 2006 wherein guidelines were issued to NBFCs (including RNBCs) for framing the Fair Practices Code. In terms of paragraph (ii) of the Annex to the Company Circular it has been prescribed under ‘Loan appraisal and terms/conditions’, that the NBFCs should convey in writing to the borrower by means of sanction letter or otherwise, the amount of loan sanctioned along with the terms and conditions including annualised rate of interest and method of application thereof and keep the acceptance of these terms and conditions by the borrower on its record.
2. It is understood that in a few cases, borrowers at the time of sanction of loans are not fully aware of the terms and conditions of the loans including rate of interest, either because the NBFC does not provide details of the same or the borrower has no time to look into detailed agreement.
3. In this connection, we advise that not furnishing a copy of the loan agreement or enclosures quoted in the loan agreement is an unfair practice and this could lead to disputes between the NBFC and the borrower with regard to the terms and conditions on which the loan is granted.
4. NBFCs are, therefore, advised to invariably furnish a copy of the loan agreement along with a copy each of all enclosures quoted in the loan agreement to all the borrowers at the time of sanction / disbursement of loans.
Yours faithfully
( P. Krishnamurthy)
Chief General Manager – in – Charge
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2007-08/158 · issued 10 Oct 2007. The plain-English explanation above is BankPulse’s own independent summary.
Update loan sanction workflows to include automatic generation and delivery of loan agreement copies with all enclosures.
💻 IT / Systems
Implement a system to track delivery of agreement copies to borrowers for audit and compliance purposes.
📜 Compliance
Train loan officers to hand over or send the agreement copy at the time of sanction/disbursement and obtain acknowledgment.
Review existing loan documentation to ensure all enclosures quoted in agreements are included in the copy provided to borrowers.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Credit Manager at a bank this circular applies to (All Non-Banking Financial Companies (NBFCs), Residuary Non-Banking Companies (RNBCs), Borrowers of NBFCs), your first concrete step on “NBFCs Must Hand Over Full Loan Agreement Copies” is: “Update loan sanction workflows to include automatic generation and delivery of loan agreement copies with all enclosures.” (RBI issued this 10 Oct 2007).
Circular: RBI/2007-08/158 -- NBFCs Must Hand Over Full Loan Agreement Copies
Issued: 10 Oct 2007
Action required: Update loan sanction workflows to include automatic generation and delivery of loan agreement copies with all enclosures.
Action required: Train loan officers to hand over or send the agreement copy at the time of sanction/disbursement and obtain acknowledgment.
Action required: Review existing loan documentation to ensure all enclosures quoted in agreements are included in the copy provided to borrowers.
Action required: Implement a system to track delivery of agreement copies to borrowers for audit and compliance purposes.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 05 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=3865&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
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