Reserve Bank of India (Non-Banking Financial Companies – Responsible Business Conduct) Directions, 2025 (Updated as on July 1, 2026)

1. Conduct rules for finance firms

This document sets the lending conduct rules for non-banking financial companies.

2. Start date

These Directions took effect on the day RBI issued them.

3. Who is covered

These Directions apply to every layer of non-banking financial company listed in them.

1. Board approves conduct policies

The Board must approve the policies and reviews that keep conduct responsible.

2. Board approves fair practices

The Fair Practices Code must be in the borrower's own language where possible.

3. Reviews go to the Board

A combined report of these reviews must go to the Board at regular intervals.

1. Language the borrower knows

Every message to the borrower must be in a language the borrower understands.

2. Form lists the papers

The loan application form must state which papers have to be sent with it.

3. Receipt for every application

The lender must give an acknowledgement for every loan application received.

4. Time frame on the receipt

That acknowledgement should also state by when the application will be decided.

5. Late payment penalty in bold

The penalty for late repayment must be printed in bold in the loan agreement.

6. Rate changes look forward

A change in interest rate or charges can only apply from that date onwards.

7. Rates published openly

Interest rates and the way risk is graded must be on the website or in newspapers.

8. Website kept current

The published information must be updated whenever a rate changes.

9. No disability discrimination

A loan cannot be refused to a person on the ground of a physical or visual disability.

10. Branches must assist

Every branch must give all possible help to such customers.

11. Complaints route stays open

Complaints from persons with disabilities go through the existing complaints system.

12. Key Facts for term loans

A Key Facts Statement is required for every retail and small business term loan.

13. Key Facts in plain language

That statement must be written in a language the borrower understands.

14. Explained and acknowledged

The statement must be explained to the borrower, who signs to say it was understood.

15. Bound by the stated terms

The lender is bound by the terms in that statement if the borrower agrees in time.

16. Full cost and schedule

The statement must carry the annual percentage rate and the repayment schedule.

17. Receipts for charges

Where the lender collects such charges, a receipt must reach the borrower in good time.

18. Summary box in the agreement

The statement must also appear as a summary box inside the loan agreement.

19. No interest on penalties

Penal charges cannot be capitalised. No further interest may run on them.

20. Penalty only on the default

Penal charges must be reasonable and charged only on the amount in default.

21. No extra interest component

No new component may be added to the rate of interest to work around these rules.

22. Board policy on penal charges

The Board must approve a policy on penal charges by whatever name they are called.

23. Same penalty for all

Within a loan product, penal charges must be the same whoever the borrower is.

24. Website link is not enough

Pointing to a schedule on the website does not meet the disclosure duty.

25. Reminders state the penalty

A reminder about a breach must state the penal charge that applies.

26. Switch at next renewal

Existing loans move to the new penal charge rules at the next review or renewal.

27. Tell the borrower at once

Any rise in the instalment or the loan period must be told to the borrower at once.

28. No negative amortisation

Stretching a floating rate loan must not leave the balance growing instead of falling.

29. Statements must be simple

The statements sent to a borrower must be simple and easy to understand.

30. Free prepayment to ₹50 lakh

A middle layer company cannot charge for prepayment on a loan up to ₹50 lakh.

31. Charge on the amount repaid

On a term loan, any prepayment charge must be based on the amount being repaid.

32. Charge base on early closure

Closing an overdraft early: the pre-payment charge is worked out on an amount not above the sanctioned limit.

33. Lender's own call is free

No charge applies where the lender itself asks for the loan to be repaid early.

34. Disclosed or not charged

A prepayment charge that was not disclosed as required cannot be charged at all.

35. No reviving waived fees

Fees waived earlier cannot be brought back when the loan is repaid early.

36. Papers back on time

The sanction letter must state when and where the property papers will be returned.

37. ₹5,000 a day for delay

Where the delay is the lender's fault, the borrower gets ₹5,000 for each day of delay.

BankPulse example. Suppose the lender is 12 days late through its own fault. The borrower is owed ₹5,000 for each of those days. That comes to ₹60,000.

38. Other rights stay

That payment does not take away any other compensation the law allows.

39. Borrower watches the testing

The borrower must be present when the gold or silver is tested at sanction.

40. Same papers everywhere

The paperwork must be the same across every branch.

41. Gold stays in the branch

Gold and silver may be handled only in branches and only by the lender's own staff.

42. Vaults, not cupboards

The metal may be stored only in branches with a vault fit for the purpose.

43. Surprise checks required

Internal audit must make surprise checks of the pledged metal and keep a record.

44. Floor price after two failures

If an auction fails twice, the floor price must be at least 85 per cent of value.

45. Auction in the same district

The first auction must be held in the district of the lending branch.

46. Lender cannot bid

The lender and its related parties cannot bid in its own auction.

47. Full auction account

After the auction the borrower must be told the price fetched and the dues settled.

48. Damage is the lender's cost

If the pledged metal is damaged while held, the lender pays for the repair.

49. Two years makes it unclaimed

Pledged gold or silver left more than two years after repayment is treated as unclaimed.

50. No tall gold loan claims

Misleading advertisements with unrealistic claims about gold loans are barred.

51. Board approves microfinance code

The microfinance fair practices code must be approved by the Board.

52. Code on show

The fair practices code must be displayed in every office and on the website.

53. One standard agreement

Microfinance loans must use a standard agreement in the borrower's language.

54. Loan card in plain words

Every entry in the loan card must be in a language the borrower understands.

55. Other products need consent

Any non-credit product needs full consent, with its fees written in the loan card.

56. Microfinance prepayment free

No prepayment charge may be taken on a microfinance loan.

57. Late charge on overdue only

A delayed payment charge applies to the overdue amount, not the whole loan.

58. Board policy on staff conduct

The Board must approve a policy on staff conduct, hiring, training and monitoring.

59. Training covers behaviour

Staff training must include how to behave properly with customers.

60. Conduct affects pay

How staff treat customers must count in how they are paid.

61. Free training for borrowers

Any training offered to borrowers must be free of cost.

62. Recovery at an agreed place

Recovery must happen at a place agreed between the borrower and the lender.

63. No harsh recovery

Neither the lender nor its agent may use harsh methods to recover dues.

64. Separate recovery complaints

There must be a separate route for complaints about recovery.

65. Told at disbursal

The borrower must be told about that route when the loan money is paid out.

66. Checks before hiring agents

A due diligence process is required before engaging any recovery agent.

67. Police check on agents

Agent staff must be checked, and that check includes police verification.

68. Borrower told who calls

The borrower must be given the recovery agent's details before recovery starts.

69. Agent list on the website

The current list of recovery agencies must be published on the website.

1. Lockers are not regulated

A company offering lockers must tell customers RBI does not regulate that service.

2. Court order to follow

The lender must take steps to comply with the Supreme Court order of 30 April 2025.

1. Old actions preserved

Anything already done under the old rules stays governed by those old rules.

2. Approvals carried over

Approvals given under the cancelled rules are now treated as given under these rules.