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
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.