RBI Proposes Banning NBFCs from Offering Revolving Credit

In India, there is a special rule-making organization for money called the Reserve Bank of India, or RBI for short.

It takes care of how banks and other money companies work.

The RBI wants to make a new rule for companies called NBFCs, which are companies that lend money but are not full banks.

These companies often give something called revolving credit, which is like a pot of money you can use again and again.

With revolving credit, you can borrow some money, pay it back, and then borrow it again whenever you need.

The RBI thinks these companies should stop offering this kind of credit.

Instead, they should only give regular loans that you pay back in fixed amounts on a set schedule.

Regular loans are called term loans, and once you pay them back, you cannot borrow that money again.

This new rule would not apply to NBFCs that are allowed by the RBI to give credit cards.

People and companies can tell the RBI what they think about this idea until August 28.