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Master Circular on Bank Finance to NBFCs (2022)

No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2021-22/149 · issued 05 Jan 2022 · ~2 min read
Quick answerRBI consolidated all instructions on bank finance to NBFCs into a single master circular as of Jan 5, 2022. Key changes include withdrawal of the NOF-linked ceiling for registered NBFCs and continued restrictions on bridge loans and guarantees. Banks must align policies with prudential norms.

What changed

RBI issued a new master circular (DOR.CRE.REC.No.77/21.04.172/2021-22) replacing the 2015 version, consolidating all instructions up to January 4, 2022. The ceiling on bank credit linked to Net Owned Fund (NOF) for registered NBFCs has been withdrawn, allowing need-based working capital and term loans. Restrictions on bridge loans, advances against shares, and guarantees for fund placement with NBFCs remain in force.

What it means for you

Banks now have greater operational freedom to extend credit to RBI-registered NBFCs without the earlier NOF-linked cap, subject to board-approved policies and prudential exposure norms. However, sensitive activities like interim finance and guarantees for NBFC fund placement continue to be prohibited. This circular reinforces the need for banks to maintain robust due diligence and compliance frameworks.

Historical instruction — do not use for current compliance. This is what was required at the time; it no longer reflects current RBI requirements. If no replacement rule is linked above, that only means none is recorded on our register yet — it does not prove no later applicable rule exists. Confirm on the official RBI source below.

What banks were required to do at the time

Who it affects

All Scheduled Commercial Banks (excluding RRBs), Credit departments handling NBFC lending, Risk management and compliance teams, Board of Directors approving loan policies

❓ Common questions

Regulatory timeline

Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).

Does this circular apply to Regional Rural Banks?

No, the circular explicitly excludes Regional Rural Banks (RRBs) from its scope.

What is the status of the earlier NOF-linked ceiling for NBFCs?

The ceiling on bank credit linked to Net Owned Fund (NOF) has been withdrawn for all NBFCs registered with RBI, allowing banks to extend need-based facilities.

Are there any activities for which bank finance to NBFCs is still prohibited?

Yes, prohibitions remain on bridge loans/interim finance, advances against collateral security of shares, and guarantees for placement of funds with NBFCs.

📜 This document’s life story (2 recorded events, each backed by RBI’s own words)
Consolidated into Master Circular: Bank Finance to NBFCs (2022)
RBI’s words: “This Master Circular consolidates instructions on the above matter issued up to March 31, 2022.”
Repealed by RBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #270: DOR.CRE.REC.No.77/21.04.172/2021-22 — "Master Circular - Bank Finance to Non-Banking Financial Companies (NBFCs)" dated January 5, 2022”
📜 Read the original circular — full text as issued by RBI
RBI/2021-22/149 DOR.CRE.REC.No.77/21.04.172/2021-22 January 05, 2022 All Scheduled Commercial Banks (excluding RRBs) Madam/ Dear Sir, Master Circular - Bank Finance to Non-Banking Financial Companies (NBFCs) Please refer to our Master Circular DBR.BP.BC.No.5/21.04.172/2015-16 dated July 1, 2015 on the captioned subject. This Master Circular consolidates instructions on the above matter issued up to January 04, 2022. Yours faithfully, (Manoranjan Mishra) Chief General Manager Master Circular on Bank Finance to Non-Banking Financial Companies (NBFCs) Purpose To lay down the Reserve Bank of India's regulatory policy regarding financing of NBFCs by banks. Classification A statutory guideline issued under Section 35A of Banking Regulation Act, 1949. Previous guidelines Master Circular DBR.BP.BC.No.5/21.04.172/2015-16 dated July 1, 2015 on ‘Bank Finance to Non-Banking Financial Companies (NBFCs)’. Application To all Scheduled Commercial Banks (excluding Regional Rural Banks). Structure 1.
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2021-22/149 · issued 05 Jan 2022. The plain-English explanation above is BankPulse’s own independent summary.
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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=12218&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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