Bajaj Finance moves to term loans as RBI weighs revolving credit ban

What happened

Bajaj Finance will launch new term-loan variants from 1 November. The move answers an RBI proposal to stop most NBFCs offering revolving credit. The facilities affected are about 15% of Bajaj Finance's assets under management (AUM).

The new variants do not allow withdrawals after repayment. They add other features to help customers move off revolving products. On the results call, management said a complete ban could have a transient impact on AUM and a marginal squeeze on net interest margin and profit. AUM in Q2 FY27 was ₹5,84,624 crore, up 26.5% on the year.

The rule is still a draft. RBI issued it on August 6. It says an NBFC 'shall only offer credit products which are in nature of term loans'. A term loan has a fixed principal and a repayment schedule. Once principal is repaid, the sanctioned limit cannot be restored. NBFCs that RBI has authorised to issue credit cards are exempt. If notified as written, the change takes effect immediately.

Lenders are pushing back. Bajaj Finance, Tata Capital and Shriram Finance sought meetings with RBI. The industry says products with AUM above ₹2 lakh crore could be affected. RBI has not published a final version.

Reported by ET BFSI; carried as story 4 in our 21 October 2026 brief.

The numbers

What it means for builders

1. Find out which of your credit products count as revolving

The test in the draft is simple: if a customer can repay and then draw the same limit again, it is revolving. Many app credit lines, flexi loans and pay-later limits run on an NBFC partner's books and work this way. List every product, the NBFC that funds it and whether the limit refills. The rule would take effect immediately once notified, so you may get no transition window.

2. Design the term-loan version before your NBFC partner asks for it

Bajaj Finance chose term loans with no redraw plus other features to keep customers. Your version needs the same parts. Each drawdown becomes its own loan with a fixed schedule. A repeat customer should get a fresh loan in a few taps, using the checks already done. The screen should show what is left to repay, not a limit that refills. Prototype it now and test it with existing borrowers, because your partner will change its products once the rule is final.

3. If your product needs revolving credit, the route is a card

The draft exempts NBFCs that RBI has authorised to issue credit cards, and banks are not covered by it. Cards are already large: 124.05 million in circulation and ₹2.02 lakh crore of spending in August 2026. A product whose value depends on a refilling limit should look at a card partnership with a bank or a card-authorised NBFC, including RuPay credit cards on UPI, rather than a revolving line from a lender without a card licence.

Who should act

• Lending and pay-later product managers — Credit lines that refill after repayment are the products the draft would stop most NBFCs from offering.
• Founders of apps that lend through NBFC partners — Your partner's product changes become your product changes, possibly with no transition window.
• Risk and finance leads at NBFCs — Moving customers to term loans changes yield and repeat-borrowing patterns, as Bajaj Finance's margin guidance shows.

This week

• List every credit product, its funding NBFC and whether the limit refills after repayment.
• Ask each NBFC partner in writing what it plans if the draft is notified unchanged, and by when.
• Sketch the term-loan flow for a repeat borrower: a fresh loan in a few taps, a fixed schedule, no refilling limit.
• Read RBI's draft directions and the digital lending guide linked below, and note where your loan screens would change.

Read next

• Setu — Account Aggregator, BBPS and UPI AutoPay for loan collections
• Decentro — banking APIs for account verification and lending flows
• IDfy — KYC and identity checks for borrowers
• RBI digital lending rules — what the existing lending rules require of apps and NBFCs
• BNPL UX patterns — pay-later screens that would need a term-loan version
• How many credit cards are there in India? — RBI's monthly card count
• How much do Indians spend on credit cards each month? — RBI's monthly card spend
• The 21 October 2026 brief story

Sources

1. ET BFSI, Bajaj Finance to launch new term loan variants from Nov 1 as RBI weighs revolving credit ban, 21 October 2026 — the original report; our checker could not open it
2. Motilal Oswal, Bajaj Finance plans new term loans following RBI draft on revolving credit ban, 19 October 2026
3. Multibagg, Bajaj Finance Q2 FY27 summary, 23 October 2026
4. RBI, Draft (Non-Banking Financial Companies – Credit Facilities) Amendment Directions, 2026, issued 6 August 2026
5. Angel One, RBI proposes ban on revolving credit products by most NBFCs, 7 August 2026
6. Outlook Business, NBFCs seek RBI review of proposed curbs on revolving credit, 17 August 2026
7. productgrowth.in, How many credit cards are there in India?, checked 25 October 2026
8. productgrowth.in, How much do Indians spend on credit cards each month?, checked 26 October 2026

Questions people ask

Has RBI banned revolving credit by NBFCs?

Not yet. RBI issued draft directions on 6 August 2026 that would limit most NBFCs to term loans. They are not final, but they would take effect immediately if notified as written.

Which NBFCs could still offer revolving credit?

The draft does not apply to NBFCs that RBI has authorised to issue credit cards. Banks are not covered by these NBFC directions.

What changes in Bajaj Finance's new loans?

From 1 November 2026 the new term-loan variants do not allow a customer to withdraw again after repaying, but add other features to ease the move from revolving products.