With the Reserve Bank of India (RBI) stepping up scrutiny of cases where lenders have extended fresh loans to borrowers with existing overdues, non-banking financial companies (NBFCs) are increasingly moving toward weekly credit bureau reporting, said industry executives.
Lenders said faster reporting cycles would reduce information gaps that earlier allowed borrowers with recent payment delays to obtain credit from multiple lenders. Credit bureau reporting, which previously had a lag of over a month, has already moved to fortnightly updates, with several lenders voluntarily shifting to weekly reporting.
Closing the Information Gap
The regulator has also asked lenders to have board-approved policies governing situations where loans are extended to borrowers who have overdue accounts elsewhere.
“RBI cannot stop lenders from disbursing loans in such cases, but it wants NBFCs to have a proper board policy explaining why a loan is given to a borrower who already has an overdue with another lender,” the chief financial officer of an NBFC said.
Industry executives said lenders typically avoid borrowers whose accounts have already slipped into default. “By definition, if it is a 90-plus day past due account, nobody funds and nobody wants to fund,” said the chief risk officer of a mid-sized non-bank lender. However, lenders may still evaluate cases where payment delays are relatively small. In some instances, borrowers with 30–50 day overdues may still be considered for credit depending on the reason for the delay and the type of product being offered.
Executives said delays may sometimes arise from operational issues such as non-presentation of cheques or payment mandates rather than borrower stress. Many NBFC credit policies allow such technical bounces, provided the instalment is cleared within a short period.
Lenders rely heavily on credit bureau data from agencies to assess borrower obligations before sanctioning loans, although most NBFCs supplement bureau scores with internal risk models and underwriting scorecards.
Managing Delinquency
The regulatory focus comes at a time when early-stage delinquencies remain relatively higher in the non-bank lending sector. Data from CRIF High Mark shows that as of November 2025, NBFCs had portfolio at risk (PAR) of 3.7% in the 31–180 day bucket, compared with 2.6% for public sector banks and 1.7% for private banks.
Executives said the regulator’s focus is also aimed at preventing practices such as loan evergreening, where fresh credit may be extended to temporarily regularise stressed accounts. Despite the scrutiny, industry executives believe the scale of such lending is unlikely to be significant. Borrowers facing genuine financial stress typically begin defaulting across multiple loans, making it difficult to mask repayment problems for long.
Stricter policies and faster reporting are expected to improve credit discipline and could help NBFCs gradually lower credit costs by limiting exposure to borrowers showing early signs of stress, executives said.