NBFCs must round off all transactions to nearest rupee
Current · Source: Reserve Bank of India · RBI/2013-14/609 · issued 27 May 2014 · ~1 min read
Quick answerRBI mandates NBFCs to round off all transactions, including interest payments and charges, to the nearest rupee. Fractions of 50 paise and above round up; less than 50 paise are ignored. Cheques with paise fractions must still be accepted.
The rule, in the simplest words
NBFCs (companies that lend money or take deposits, like a bank but not a bank) must round off all money amounts in transactions to the nearest rupee (whole number).
If the amount has 50 paise (half a rupee) or more, round it up to the next rupee. If it has less than 50 paise, just drop the paise (ignore them).
NBFCs must still accept cheques or drafts from customers that have paise (fractions of a rupee) written on them—they cannot say no to those.
How it plays out — a real example
An NBFC compliance officer in Indore calculates interest on a customer's loan as ₹1,234.56. She rounds it up to ₹1,235 because 56 paise is more than 50. Later, a customer gives a cheque for ₹567.80 to pay an installment; she accepts it without fuss, even though it has paise, because the rule says she must.
What changed
RBI observed that some NBFCs were not rounding off transactions like interest on deposits or advances to the nearest rupee. This circular aligns NBFC practice with existing bank norms to avoid public inconvenience.
What it means for you
NBFCs must now apply the same rounding rule as banks: fractions of 50 paise or more round up, less than 50 paise are dropped. This standardizes customer-facing transactions and reduces confusion. However, NBFCs cannot reject client cheques or drafts that include paise fractions.
What you must do
Update your systems to automatically round off all interest payments on deposits and interest charges on advances to the nearest rupee using the specified rule.
Train staff to ensure no client cheque or draft with paise fractions is rejected.
Review existing transaction records to confirm compliance and adjust any past discrepancies.
Communicate the rounding policy to customers to avoid disputes.
Who it affects
All Non-Banking Financial Companies (NBFCs), NBFC customers receiving interest on deposits, NBFC borrowers paying interest on advances
❓ Common questions
What is the rounding rule for fractions of a rupee?
Fractions of 50 paise and above must be rounded up to the next higher rupee. Fractions less than 50 paise should be ignored (dropped).
Can we reject a client's cheque if it includes paise?
No. The circular explicitly states that NBFCs must not reject cheques or drafts issued by clients that contain fractions of a rupee.
Does this apply to all NBFC transactions?
Yes, it applies to all transactions, including payment of interest on deposits and charging of interest on advances.
📜 Read the original circular — full text as issued by RBI
RBI/2013-14/609
DNBS.CC.PD.No.377/03.10.01/2013-14
May 27, 2014
To
All Non-Banking Financial Companies
Dear Sir,
Rounding off transactions to the Nearest Rupee by NBFCs
It has come to the notice of the Reserve Bank that some non-banking financial companies (NBFCs) are carrying out transactions, including payment of interest on deposits/ charging interest of advances etc., without rounding off to the nearest rupee. In order to obviate unnecessary discomfort to the public and also to align with the prevalent practice as applicable to banks, NBFCs are advised that all transactions, including payment of interest on deposits/ charging of interest on advances, should be rounded off to the nearest rupee, i.e. fractions of 50 paise and above shall be rounded off to the next higher rupee and fractions of less than 50 paise should be ignored. However, NBFCs should ensure that cheques/ drafts issued by clients containing fractions of a rupee should not be rejected by them.
Yours faithfully
(A.Mangalagiri)
General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2013-14/609 · issued 27 May 2014. The plain-English explanation above is BankPulse’s own independent summary.
Update your systems to automatically round off all interest payments on deposits and interest charges on advances to the nearest rupee using the specified rule.
📜 Compliance
Train staff to ensure no client cheque or draft with paise fractions is rejected.
Review existing transaction records to confirm compliance and adjust any past discrepancies.
Communicate the rounding policy to customers to avoid disputes.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are an IT/Systems lead at a bank this circular applies to (All Non-Banking Financial Companies (NBFCs), NBFC customers receiving interest on deposits, NBFC borrowers paying interest on advances), your first concrete step on “NBFCs must round off all transactions to nearest rupee” is: “Update your systems to automatically round off all interest payments on deposits and interest charges on advances to the nearest rupee using the specified rule.” (RBI issued this 27 May 2014).
Circular: RBI/2013-14/609 -- NBFCs must round off all transactions to nearest rupee
Issued: 27 May 2014
Action required: Update your systems to automatically round off all interest payments on deposits and interest charges on advances to the nearest rupee using the specified rule.
Action required: Train staff to ensure no client cheque or draft with paise fractions is rejected.
Action required: Review existing transaction records to confirm compliance and adjust any past discrepancies.
Action required: Communicate the rounding policy to customers to avoid disputes.
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 03 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=8902&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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