Lending rules: India
What the published rules require for consumer loans in India, a reference market for Southeast Asia, in the order a loan is made.
Last reviewed 22 October 2026 · Email me when these rules change
Lender type covered Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India, typically as an NBFC-Investment and Credit Company (NBFC-ICC), making unsecured personal loans to consumers digitally
- 01
What licence do you need to lend in India?
Licence and conduct rules
What the rules require
A company whose principal business is that of a non-banking financial institution must hold a certificate of registration from the Reserve Bank of India (RBI) under Section 45-IA of the Reserve Bank of India Act, 1934. The required Net Owned Fund for an NBFC-Investment and Credit Company (NBFC-ICC) is ₹10 crore, with a glide path for existing NBFCs ending on 31 March 2027, and NBFCs are placed in Base, Middle, Upper or Top layers under scale-based regulation, with asset size thresholds of ₹1,000 crore and ₹1,00,000 crore. Key Facts Statement and penal-charge rules are set by the RBI (Non-Banking Financial Companies – Responsible Business Conduct) Directions, 2025, and Chapter III of the RBI (Non-Banking Financial Companies – Credit Facilities) Directions, 2025 sets out digital lending rules. The NBFC must conduct enhanced due diligence before engaging a lending service provider (LSP), remains fully responsible for the LSP's acts and omissions, and retains responsibility for grievance redressal.
Effective: being checked against the official text · Rules as of 15 July 2026 · Source: Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Directions, 2025 (updated as on July 1, 2026) · Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Directions, 2025 (updated as on July 15, 2026)
- 02
How are loan fees regulated in India?
Key Facts Statement, digital-loan fees and cooling-off
What the rules require
The NBFC must provide a Key Facts Statement (KFS) as required by the RBI (Non-Banking Financial Companies – Responsible Business Conduct) Directions, 2025. For digital loans, the digital view of loan offers must show the lender's name, loan amount and tenor, Annual Percentage Rate (APR), monthly repayment obligation and penal charges (if applicable), with a link to each lender's KFS. Fees payable to a lending service provider (LSP) must be paid directly by the NBFC and not charged to the borrower by the LSP. The borrower may exit a digital loan during a cooling-off period of at least one day by paying principal and proportionate APR without penalty; the NBFC may retain a reasonable one-time processing fee, which must be disclosed upfront in the KFS.
Effective 28 November 2025 · Rules as of 15 July 2026 · Source: Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Directions, 2025 (updated as on July 15, 2026)
- 03
What affordability checks are required in India?
Assessment of ability to repay
What the rules require
For digital loans, before extending any loan the NBFC must obtain information on the borrower's economic profile, covering at least age, occupation and income, and keep it on record for audit purposes; credit limits may not be increased automatically without an explicit request. A microfinance loan is any collateral-free loan to a household with annual household income up to ₹3,00,000, irrespective of end use and mode of application, processing or disbursal (physical or digital). For such loans, the NBFC must have a Board-approved policy limiting the household's monthly loan repayment obligations to a maximum of 50 per cent of monthly household income and a Board-approved policy for assessing household income, and must submit household income information to the Credit Information Companies (CICs).
Effective 28 November 2025 · Rules as of 15 July 2026 · Source: Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Directions, 2025 (updated as on July 15, 2026)
- 04
Can loan contracts be signed electronically in India?
Loan agreement and electronic signature
What the rules require
The Second Schedule of the Information Technology Act, 2000, as amended by S.O. 1119(E) of 1 March 2019, includes e-authentication using Aadhaar or other e-KYC services; the eSign online electronic signature service uses Aadhaar e-KYC authentication and is provided by Certifying Authorities licensed under the Act by the Controller of Certifying Authorities. Documents listed in the First Schedule are excluded, but notification S.O. 4720(E) of 26 September 2022 carved out Demand Promissory Notes and Bills of Exchange issued in favour of or endorsed by RBI-regulated entities, and powers of attorney empowering such entities, from the exclusion. For digital loans, digitally signed documents such as the KFS and sanction letter must flow automatically to the borrower's registered and verified email or SMS upon execution of the loan contract.
Effective: being checked against the official text · Rules as of 15 July 2026 · Source: S.O. 4720(E), amendments to the First Schedule of the Information Technology Act, 2000 (26 September 2022) · S.O. 1119(E), amendment to the Second Schedule of the Information Technology Act, 2000 (1 March 2019) · eSign – Online Electronic Signature Service (brochure) · Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Directions, 2025 (updated as on July 15, 2026)
- 05
What identity checks and anti-money laundering duties apply in India?
KYC and AML/CFT
What the rules require
- 06
What are the data protection and credit bureau rules in India?
Personal data protection and credit reporting
What the rules require
- 07
How is debt collection regulated in India?
Debt collection and recovery agents
What the rules require
This page summarises published rules for general information; it is not legal advice. Rules change: check the current text with the authority before acting.