No longer current — withdrawn, no replacement on file yet
Source: Reserve Bank of India · RBI/2022-23/14 · issued 01 Apr 2022 · ~2 min read
Quick answerRBI consolidated all instructions on bank finance to NBFCs as of March 31, 2022. Key change: credit ceiling linked to NBFCs' Net Owned Fund is withdrawn for registered NBFCs engaged in asset financing, loan, factoring, or investment activities. Banks can now extend need-based working capital and term loans, subject to prudential norms.
What changed
The previous ceiling on bank credit linked to NBFCs' Net Owned Fund (NOF) has been removed for all NBFCs registered with RBI and engaged in asset financing, loan, factoring, or investment activities. Banks can now provide need-based working capital and term loans to these NBFCs, subject to prudential exposure norms. Additionally, banks may finance NBFCs against second-hand assets financed by them.
What it means for you
Banks have greater operational freedom to lend to registered NBFCs without the earlier NOF-linked cap, enabling more flexible credit decisions. However, restrictions on financing certain activities (like bridge loans, advances against shares, and guarantees for fund placements) remain in force. Banks must ensure their loan policies are board-approved and comply with prudential exposure limits.
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
Update internal credit policies to reflect removal of NOF-linked ceiling for registered NBFCs.
Ensure board approval for any revised loan policy covering NBFC financing.
Continue to adhere to prudential exposure norms and restrictions on prohibited activities (e.g., bridge loans, advances against shares).
Review and monitor compliance with Section 35A of the Banking Regulation Act, 1949.
repealed_by — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
Status change: withdrawn03 Aug 2026, 04:00 IST
Built from our lineage records — each fact carries its provenance; missing history simply is not shown (never guessed).
Does this circular remove all restrictions on bank finance to NBFCs?
No. While the NOF-linked ceiling is withdrawn for registered NBFCs, restrictions on financing certain activities—like bridge loans, advances against collateral security of shares, and guarantees for fund placements—continue to apply.
Can banks now finance NBFCs against second-hand assets?
Yes, banks may extend finance to NBFCs against second-hand assets financed by them, based on the NBFC's experience in such financing.
What is the effective date of this master circular?
The circular is dated April 1, 2022, and consolidates instructions issued up to March 31, 2022.
📜 This document’s life story (2 recorded events, each backed by RBI’s own words)
RBI’s words: “This Master Circular consolidates instructions on the above matter issued up to March 31, 2023.”
Repealed byRBI/2025-26/100 — Consolidation of Regulations — Withdrawal of circulars (28 Nov 2025)
RBI’s words: “Official withdrawal register entry #256: DOR.CRE.REC.No.07/21.04.172/2022-23 — "Master Circular - Bank Finance to Non-Banking Financial Companies (NBFCs)" dated April 1, 2022”
📜 Read the original circular — full text as issued by RBI
RBI/2022-23/14
DOR.CRE.REC.No.07/21.04.172/2022-23
April 01, 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 DOR.CRE.REC.No.77/21.04.172/2021-22 dated January 05, 2022 on the captioned subject. This Master Circular consolidates instructions on the above matter issued up to March 31, 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 DOR.CRE.REC.No.77/21.04.172/2021-22 dated January 05, 2022 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/2022-23/14 · issued 01 Apr 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=12280&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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