NBFC software: what it must handle under RBI rules
The Reserve Bank’s consolidated 2025 Directions, translated into what software has to calculate, show and report, from the team building ERPStack.
Last updated 21 October 2026
What should NBFC software handle?
NBFC software has to run loans the way RBI’s NBFC Directions require: issue a Key Facts Statement with the APR, levy penal charges rather than penal interest, tag SMA and NPA accounts in the day-end process, report to credit bureaus on fixed dates, follow the digital lending rules on flow of funds, and feed the supervisory returns.
Where ERPStack is today
ERPStack Lending is planned and in development. Nothing on this page is available to use yet, and no part of it has been reviewed or approved by the Reserve Bank.
Sign upWhich RBI Directions does NBFC software have to follow?
On 28 November 2025 the Reserve Bank replaced thousands of circulars with consolidated Master Directions written for each type of regulated entity, NBFCs among them (RBI press release). For software, a handful of those NBFC Directions matter most:
| Direction | What it governs in the software |
|---|---|
| Registration, Exemptions and Scale Based Regulation | Which layer the NBFC is in, and so which rules apply |
| Responsible Business Conduct | Fair Practices Code, KFS and APR, penal charges, prepayment, document release |
| Credit Facilities | Digital lending, gold and silver loans, microfinance loans, project finance |
| Income Recognition, Asset Classification and Provisioning | Overdue dates, SMA and NPA tagging, upgrades and provisions |
| Credit Information Reporting | What goes to the credit bureaus, in what format and when |
| Supervisory Returns (2026) | Which returns are filed on RBI’s CIMS portal, how often |
What do the Scale Based Regulation layers mean for software?
NBFCs sit in four layers (SBR Directions). The Base Layer covers non-deposit-taking NBFCs below ₹1,000 crore of assets; the Middle Layer covers all deposit-taking NBFCs and non-deposit-taking NBFCs of ₹1,000 crore and above; the Upper Layer holds NBFCs the Reserve Bank identifies each year for tighter rules; the Top Layer is expected to stay empty. The layer changes real calculations, for example the prepayment rules on business loans and the standard asset provision, so it should be a setting the software reads, not an assumption built into it.
How must NBFC software handle the KFS, APR and penal charges?
The Responsible Business Conduct Directions set what a borrower is shown and charged (RBC Directions).
| Rule | What the software must do |
|---|---|
| Fair Practices Code | Acknowledge every application, communicate in a language the borrower understands, and show the late-payment penalty in bold in the loan agreement |
| Key Facts Statement | For retail and MSME term loans sanctioned from 1 October 2024: a standard KFS with a unique proposal number, valid for at least three working days (one working day for loans under seven days) |
| APR | Compute the annual percentage rate on the net disbursed amount, including all charges the NBFC levies, and attach the amortisation schedule |
| Penal charges | Charge a flat penalty on the amount in default, as a separate line; no penal interest, no capitalisation, no fresh penalty on earlier penalties |
| Prepayment | Levy no prepayment charge on floating rate loans to individuals for non-business purposes; for business loans the rule depends on the NBFC’s layer and loan size |
The penal charges rule was first issued on 18 August 2023 (RBI circular) and applies to fresh loans from 1 April 2024, with existing loans switched over by 30 June 2024. Systems that still store a single “penal rate” field on the loan need rebuilding, not reconfiguring.
How does NBFC software classify SMA and NPA accounts?
| Status | Overdue period | Source |
|---|---|---|
| SMA-0 | Up to 30 days | Resolution of Stressed Assets Directions |
| SMA-1 | More than 30 and up to 60 days | Resolution of Stressed Assets Directions |
| SMA-2 | More than 60 and up to 90 days | Resolution of Stressed Assets Directions |
| NPA (Middle and Upper Layer) | More than 90 days | IRACP Directions |
| NPA (Base Layer) | More than 90 days, after a glide path from 180 days that ended on 31 March 2026 | IRACP Directions |
Three details decide whether the software gets this right:
- Day-end dating. SMA and NPA dates are the calendar date for which the day-end process runs, not the time it actually runs.
- Borrower-wise, not facility-wise. When one facility becomes an NPA, all of that borrower’s facilities with the NBFC are treated as NPA.
- Upgrades. An NPA returns to standard only when the entire arrears of interest and principal are paid, across all the borrower’s facilities.
What must NBFC software report, and how do the digital lending rules change it?
Credit information companies
NBFCs report to all credit information companies. From 1 July 2026, data goes as on the 9th, 16th, 23rd and last day of each month; the month-end full file is due by the 5th of the next month and the mid-month files, carrying only changed accounts, within four calendar days. The CKYC number must also be reported where available (CIR Amendment Directions).
Digital lending
The digital lending rules issued on 8 May 2025 (Digital Lending Directions, 2025) now sit, for NBFCs, in Chapter III of the Credit Facilities Directions (Credit Facilities Directions):
- Disbursal goes straight into the borrower’s bank account and repayment straight into the NBFC’s, with no pass-through or pool account of a lending service provider.
- The borrower can exit during a cooling-off period of at least one day by repaying principal and proportionate APR.
- The KFS, sanction letter and terms flow automatically to the borrower’s verified email or SMS once the contract is executed.
- Every digital lending app the NBFC deploys or joins is reported on RBI’s CIMS portal, certified by the Chief Compliance Officer or a board-designated official.
- All lending through those apps is reported to the credit information companies, whatever its nature or tenor.
Supervisory returns
Returns go to RBI on the CIMS portal under the NBFC Supervisory Returns Directions of 31 July 2026, with the list of returns and their periodicity depending on the NBFC’s layer (Supervisory Returns Directions). Software should produce the underlying data from the loan book rather than from spreadsheets.
What is ERPStack Lending planning for NBFCs?
ERPStack is an ERP for Indian small and mid-sized businesses that Perimattic is building. ERPStack Lending is a planned app line for lenders, NBFCs among them. The plan:
- The NBFC’s layer kept as a setting that drives layer-specific rules.
- KFS and APR computation from the loan’s own charges and schedule.
- Penal charges as a separate ledger line, with no penal interest field at all.
- Day-end SMA and NPA tagging, borrower-wise, with upgrade checks.
- Credit information files on the 9th, 16th, 23rd and month-end cycle.
- Loan accounting posted to ERPStack’s general ledger.
Status: ERPStack Lending is planned and in development; none of this is available to use yet, and it carries no RBI approval or certification. Sign up to tell us what your NBFC needs.
This page is general guidance, not legal or regulatory advice. RBI Directions were checked on 22 October 2026.
More on lending software
NBFC software, answered
What is the difference between penal charges and penal interest?
Penal interest was an extra rate added to the loan’s interest rate when a borrower defaulted. Since 1 April 2024 for fresh loans, NBFCs may only levy penal charges: a reasonable charge on the amount in default, set by a board-approved policy, never capitalised and never compounded. Interest on unpaid EMIs is still allowed, but only at the contracted rate.
How often must an NBFC report to credit bureaus?
From 1 July 2026, NBFCs report credit information as on the 9th, 16th, 23rd and last day of each month. The month-end full file is due by the 5th of the next month, and the three mid-month submissions carry only changed accounts and are due within four calendar days. Before July 2026 the cycle was fortnightly.
What is the cooling-off period on a digital loan?
Under the digital lending rules, a borrower can exit a digital loan during an initial cooling-off period by paying back the principal and the proportionate APR, with no penalty. Each NBFC sets the period in its credit policy, but it cannot be shorter than one day. A reasonable one-time processing fee may be kept if disclosed in the KFS.
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