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Open in new tab Repossessed, Revalued, Regulated: RBI’s framework for treatment of repossessed property
-Anita Baid & Dayita Kanodia | finserv@vinodkothari.com
RBI, on May 5, 2026, came out with the draft directions on Specified Non-financial Assets (SNFA). These directions have been introduced with the intent of specifying the treatment of non-financial and non-banking assets, particularly immovable property, acquired by the lender in satisfaction of their claims on the borrower.
It is relevant to note that a common framework has been introduced for banks and NBFC, which is in contradiction to the recent consolidation approach adopted by the Department of Regulations. This could possibly also create confusion as to the treatment of non-banking assets relevant for banks, being referred to under the common framework, to be also made applicable on NBFC. In case of banks, the Banking Regulations Act prohibits banks from holding such non-banking assets (NBAs) beyond a period of 7 years, except for property acquired for own use.
Key Highlights of the Proposal:
Our comments on the key proposals have been provided below:
- SNFA would include those immovable assets which are acquired by a RE in satisfaction or part satisfaction of its claims on the borrower along with the non-banking assets as per Section 9 of the BR Act.
VKC comment: This would mean that movable property, like vehicles, equipment, is not being covered under the purview of these regulations. Further, the restriction on banks as provided under the BR Act to acquire any immovable assets other than assets put to its own use should not apply to NBFCs.
- The SNFA can only be acquired by the RE concerned when
- The RE’s exposure to a borrower is classified as non-performing, and
- Where other means of recovery have been explored and deemed unviable.
VKC comment: This could be practically challenging since in certain adverse situations (like fraud classification) the RE may not want to wait for the asset to turn into an NPA before repossession is done. However, practically, evaluation and classification as fraud would easily take 90 days.
Further, the fact that all other means of recovery has been explored and deemed unviable would be very subjective to establish.
- Acquisition will result in proportionate extinguishment of the exposure in lieu of which the SNFA is being acquired. Any part extinguishment of claims by the RE concerned would be deemed as restructuring
VKC comment: It is understood that any compromise settlement of the dues would be done as per the extant regulations for banks and NBFCs (as the case may be) and the amount outstanding post such settlement shall be considered to determine the remaining claims, if any.
- Upon acquisition, the SNFA shall be recorded in the balance sheet at the lower of-
- The NBV of the extinguished exposure or
- The distress sale value of the SNFA arrived at by at least two independent external valuers.
At each subsequent reporting date, the SNFA shall be carried on the balance sheet at the lower of the last available distress sale value, or the revised NBV (value of extinguished exposure, net of the notional provisions applicable had the exposure continued on the books of the RE).
VKC Comment: The accounting treatment of the SNFA should have been governed as per the provisions of the accounting standards (para 3.2.23 of Ind AS 109). There could be a possible conflict since the accounting standards require the asset to be recognised on fair value.
- Post-acquisition, the SNFA will be revalued at least once every two years on a distress sale basis. The reasons for failure to dispose of the asset earlier shall also be recorded. Valuation gains should be ignored and any diminution in value should be recognised in profit and loss statement immediately.
- Any accrued interest or charges with respect to the exposure shall not be recognised till the SNFA is actually disposed off and such interest or charges are received by the RE.
VKC Comment: This is consistent with the IRAC provisions which requires the RE to shift from accrual accounting to cash basis accounting upon the asset turning into an NPA.
- Any expense/income incurred for the SNFA should be recognised in the P/L account for the year in which the same is incurred/earned.
- Disposal of such SNFA shall be by way of a public auction following the SARFAESI procedures
VKC Comment: SARFAESI is applicable to NBFCs having an asset size of more than 100 crore and where the outstanding amount is a minimum of ₹20 L. Accordingly, in some cases, SARFAESI may not be applicable at all. In such cases, following SARFAESI procedures should ideally not be made mandatory.
- SNFA cannot be sold back to the borrower or its RPs (as defined under the IBC, 2016)
VKC Comments: Even under IBC, 29A bars the borrower and its connected persons from bidding on the repossessed assets (except for certain exemptions in case of MSME borrowers).
- In case of failure to dispose the SNFA within earlier of:
- 7 years from the date of acquisition or
- The carrying value becoming zero
the asset shall be deemed to have been employed for its own use by the RE and will be recorded as a fixed asset.
VKC Comments: It seems unclear if the RE concerned can put the assets to its own use immediately on the acquisition of such assets.
- Specific disclosure to be made as a part of the financial statements as per the format prescribed by RBI.
Also, read our article,
Option to exit: Type 1 NBFCs get continuing deregistration option
– Team Finserv | finserv@vinodkothari.com
Existing companies may apply within 6 months of 1st July; new companies may avoid registration on satisfying Type 1 and asset size conditions
The RBI’s relief to exempt pure investment companies from exemption from regulation, is now in final shape. We have earlier commented on the draft Amendment Directions. The final amendments in Directions, notified on 29th April, 2026, accept some of the public feedback. However, the condition that the NBFC seeking exemption should not have any debt on the liability, nor any debt on the asset side, even if from/to group entities, remains.
The exemption window opens on 1st July, based on asset size, no customer interface, no public funds and some other conditions (discussed below). The window remains till 31st Dec., 2026; however, even in future, it will be open for NBFCs to opt to exit from registration.
Read more →RBI’s Draft PPI Norms: Stricter Cash Rules, Simplified Categories, No Cross Border Payments and More
Simrat Singh and Jeel Ranavat | Finserv@vinodkothari.com
The RBI has proposed an overhaul of the existing prepaid payment instruments (PPI) framework through its draft Master Direction, 2026. The changes aim to, inter-alia, simplify classification, tighten cash usage, restrict cross border payments etc. In this note, we discuss some of the key proposals of the draft master directions.
Simpler classification
Two overarching categories are proposed:
- General Purpose PPI: Comprising Full-KYC PPI and Small PPI (single type, no further sub-types);
- Special Purpose PPI: comprising Gift PPI, Transit PPI, PPI for Foreign Nationals/NRIs (UPI One World) and any other with prior RBI approval. PPI-MTS renamed into Transit PPI
Credit card loading restricted
With a view to curb ‘loan-loaded PPIs’, it is proposed that credit cards can now be used only for Special Purpose PPIs, while General Purpose PPIs are limited to bank account debit, cash or another PPI. This signals a clear intent to ring-fence credit-backed spending to specific use cases. See our resource around loan loaded PPIs here.
Statutory auditor certification for net worth compliance
The draft introduces a procedural clarification by requiring non-bank PPI applicants to submit a certificate from their statutory auditor confirming compliance with the minimum net worth criteria of ₹5 Crores. While the threshold itself remains unchanged, earlier a CA certificate was required; the draft now specifically mandates certification by the statutory auditor in a prescribed format..
Sharp cut in cash usage
Cash usage sees the biggest tightening. Cash loading for Full-KYC PPIs is reduced from ₹50,000 to ₹10,000 per month, pushing higher-value transactions towards bank-linked digital modes. The move appears designed to curb anonymity and improve traceability.
P2P transfers also curtailed
Peer-to-peer transfer (i.e. transfer to another person’s bank account or PPI) limits have been standardised. Instead of differentiated limits based on beneficiary registration, a flat cap of ₹25,000 per month is now proposed.
Monthly usage cap formalised
While earlier regulations relied on outstanding balance caps, the draft introduces an explicit ₹2 lakh monthly debit limit for Full-KYC PPIs. In substance, this aligns with the existing ceiling but adds clarity on usage.
Banks get faster go-live
Banks issuing PPIs will no longer require prior approval if they are already qualified to issue debit cards. A prior intimation to RBI will be sufficient, allowing faster product launches. This acknowledges that regulated banks already meet baseline prudential standards.
This significantly reduces time-to-market and reflects regulatory reliance on the existing prudential and compliance standards applicable to banks. The change is expected to enhance agility, support faster product innovation, and strengthen banks’ participation in the digital payments ecosystem.
Non-bank approvals streamlined
For non-bank issuers, the process is simplified with perpetual authorisation and removal of the explicit in-principle approval stage. The timeline for submission post-regulatory NOC is also relaxed to 45 days from the earlier requirement of 30 days. The draft is silent on the earlier requirement of submitting a System Audit Report (SAR) at the time of authorisation. However, an IS Audit report is proposed to be submitted annually by the issuer.
Core portion interest computation shifts to monthly basis
The draft revises the methodology for computing interest on the core portion by moving from a fortnightly to a monthly calculation framework. Instead of averaging 26 lowest fortnightly balances, issuers will now compute the average of 12 lowest monthly outstanding balances, with the minimum one-year operational requirement continuing. This change appears to be a pragmatic step towards operational simplification, reducing computational intensity while aligning the framework with more conventional monthly cycles. While the earlier explicit restriction on availing loans against such deposits is not reiterated, the fiduciary nature of PPI funds implies that pledging or leveraging customer balances would, in our view, remain impermissible.
Foreign wallet norms liberalised; A push for UPI One World
In contrast to tightening elsewhere, the framework for foreign users is expanded. The UPI One World wallet will now be available to all foreign nationals and NRIs, with a higher ₹5 lakh monthly usage limit.
This step is aimed at making UPI more accessible to international users, especially inbound travellers who often face challenges in using domestic payment systems. By enabling seamless, wallet-based access to UPI, the framework improves convenience and enhances the overall payment experience in India.
Cross-border usage removed
A key change is the blanket removal of cross-border transaction capability for PPIs. Earlier, AD-1 bank issued PPIs could be used for limited overseas transactions. The draft eliminates this entirely, narrowing the scope of PPIs.
Other notable changes
Closed system PPIs continue to remain outside regulation but marketplaces are explicitly excluded from claiming this status. The definition of “merchant” has been broadened, removing the requirement of contractual acceptance. Small PPIs will now expire after 24 months with mandatory balance transfer in case the same has not been converted into Full-KYC PPI, instead of merely restricting further credits.
See our existing resources on PPI:
Workshop on Financial Sector Entities: RBI Related Party Lending Restrictions and Related Party Transactions under Listing Regulations /Companies Act
Register your interest: https://forms.gle/csBgaWLpmantMK4d8
Rethinking Repayment Recurrence: EMIs, EWIs or EDIs
Manisha Ghosh, Assistant Manager | finserv@vinodkothari.com
Introduction
In the world of finance, where EMIs reign is supreme, a quiet revolution is brewing. For decades, the EMI—a fixed, predictable monthly payment—has been the default repayment option in case of loans. This repayment model aligns well with the cash-flow profile of salaried borrowers, whose income is credited at predictable monthly intervals. A fixed monthly outflow is therefore rational and manageable for the borrower. But what happens when there are borrowers who don’t live by the calendar?
In India there also exists a substantial segment of borrowers with fluctuating income streams such as taxi drivers, gig workers, small traders, daily wage earners, contract-workers, etc. Their earnings are typically received on a daily or near-daily or weekly basis and may fluctuate based on demand, seasonality, or operational variables. For such a category of borrowers, imposing a lump-sum monthly repayment obligation may create liquidity stress. People with irregular income may find it difficult to set aside a large lump sum to honor the obligation on the due date, even if their total earnings over the month are sufficient. As a result, they may lead to missed payments not because they lack income or resources, but because their cash flow does not align with the repayment schedule.
To address this structural mismatch between income frequency and repayment frequency, banks and NBFCs have been exploring the option of Equated Daily Instalments (“EDIs”). Under an EDI structure, the repayment obligation is broken into smaller, more frequent daily amounts, theoretically aligning repayment with the borrower’s earning cycle and smoothing liquidity issues.
Regulatory Landscape
There is no regulatory prohibition under the RBI framework preventing lenders from offering daily repayment options in their loan products. In fact, the RBI’s Key Fact Statement (KFS) format prescribed under the Responsible Lending Conduct Directions acknowledges not only EMIs but has referred to the term Equated Periodic Instalments (‘EPI’), which has a broader meaning.
The use of the term EPI indicates that repayment need not necessarily be structured on a monthly basis. Rather, lenders are permitted to determine an appropriate repayment frequency whether daily, weekly, fortnightly, or monthly depending on the loan product and borrower profile. The repayment frequency is arrived at by considering the source of income, cashflows of the borrower; this ensures that servicing of such loans is aligned with the borrower’s income profile and does not create any undue financial burden or pushes the borrower towards a debt trap.
Suitability of the Lending Product
Irrespective of the repayment frequency, the issue of fairness in lending still needs to be examined. In case a borrower is required to make repayments every single day, any small disruption in income will be considered as a default and have an immediate impact on the borrower’s performance. For example, if the borrower falls sick or is unable to work for a few days, their daily income may stop. In such a case, they may miss one or more installment payments. Since the due date arises daily under an EDI structure, even one missed payment can start the DPD count, and the delay will continue to add up to the repayment obligation until the payment is made.
This situation will have adverse implications not just for the borrower but also for the lender. The borrower’s credit record may worsen quickly, even if the income disruption is temporary. At the same time, the lender may see rising delinquencies in its portfolio.
While EDIs may help in synchronising repayment with daily income, they provide very little cushion to borrowers in case of unforeseen and unexpected events resulting in default in repayment. Lenders may instead consider a weekly repayment model, where borrowers can collect and accumulate their daily earnings and repay the lender on a weekly basis.
A weekly installment structure provides the borrower with a limited but meaningful cushion. If the borrower is unable to earn on a particular day, they still have the remaining days of the week to generate income and arrange the repayment amount. This flexibility reduces the likelihood of an immediate default and offers a more balanced approach between daily and monthly repayment models.
Operational Flexibility for Lender
From an operational perspective, daily repayments also create practical challenges. The lender would need to monitor DPD status every day, carry out daily accounting entries, and reconcile payments continuously. For a large number of borrowers, this can become difficult and resource-intensive. Further, if collections are done manually or through agents, missed payments may require daily follow-ups. This increases recovery costs and may create borrower stress or reputational risks for the lender.
Having said that, this kind of arrangement is restricted under the digital lending regulations. Paragraph 10(2) of the RBI (NBFC- Credit Facilities) Directions, 2026 mandates that all loan servicing and repayments must be executed directly by the borrower into the regulated entity’s bank account. The framework expressly prohibits the use of pass-through or pool accounts of any third party, including those of a Lending Service Provider (‘LSP’).
Accordingly, under the current digital lending regime, repayments cannot be routed through an intermediary. This makes such a model difficult to implement for loans that are originated digitally.
Conclusion
The choice of repayment frequency should not be driven by convention alone, but by the borrower’s income pattern and capacity to absorb short-term shocks. EDIs attempt to bridge this gap, but a rigid daily obligation can expose borrowers to immediate default in the event of even minor income disruptions.
At the same time, daily repayment structures increase operational and monitoring burdens for lenders. Therefore, the focus should be on designing repayment models that balance flexibility with discipline. Structures such as weekly repayments, grace periods, or limited flexibility mechanisms may provide a more sustainable balance. Ultimately, a well-designed repayment model protects both borrower credit health and lender portfolio quality, reinforcing the broader principles of responsible and fair lending.
CareEdge Award for Structured Finance Instruments
Last date of application: 16th April, 2026
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Not Registration but Caution: What Tamil Nadu Coercive Actions Law Means for NBFCs
Subhojit Shome & Simrat Singh | Finserv@vinodkothari.com
Two notifications issued under the Tamil Nadu Money Lending Entities (Prevention of Coercive Actions) Act, 2025 are in the news, as they lay down the registration framework for money-lending entities operating in Tamil Nadu. We have already clarified in our earlier write-up that the TN Act does not apply to NBFCs therefore there is no question of them going ahead and registering under the same. However, the provisions dealing with coercive recovery practices are very much applicable to NBFCs and unfortunately are quite widely worded as well.
At first glance, this may appear to be a double whammy for NBFCs. On the one hand, NBFCs are already subject to detailed recovery and customer conduct requirements prescribed by the RBI. Notably, RBI has also proposed a uniform framework on recovery practices across all REs which we had covered here. On the other hand, the Tamil Nadu legislation introduces state-level consequences where recovery practices are alleged to be “coercive”. In our view, if an NBFC follows the RBI framework in letter as well as spirit, it is unlikely to face any difficulty under the State law.
That said, given the fact that a defaulter would never be happy with any recovery measures, it is quite possible that NBFCs face complaints by borrowers in terms of recovery action under section 20. Section 21 provides for severe criminal consequences. Defaulting borrowers may be a bit more active or aggressive than lenders who have been defaulted against. For example, even while the Act is being comprehended, there is already a case registered under sections 20 and 21 against a recovery agency.
One might then ask who exactly is intended to be covered under the Act, given that banks (commercial as well as cooperative) and NBFCs are outside the registration framework. It so appears that informal money-lending activities and so-called ‘loan sharks’ are quite active in the State. It has historically taken legislative steps to curb such practices. For instance, the State had earlier enacted the Tamil Nadu Prohibition of Charging Exorbitant Interest Act, 2003 to deal with usurious interest-charging practices. The present law continues that policy objective by requiring such money-lending entities to register before carrying on lending activities.
Adopting 1600-Number Series- Preventive Measure or Burden?
- Harshita Malik | finserv@vinodkothari.com
Introduction
The Telecom Regulatory Authority of India (TRAI) has mandated the use of the 1600-series numbering for service and transactional voice calls by entities regulated by RBI (including NBFCs), SEBI, and PFRDA, to curb financial frauds through mis-selling and unauthorised communications. The Reserve Bank of India has aligned with this via a notification dated January 17, 2025, titled Prevention of financial frauds perpetrated using voice calls and SMS – Regulatory prescriptions and Institutional Safeguards (‘Circular’), requiring NBFCs to use ‘1600xx’ series for such calls to existing or prospective customers. Considering that the 1600 series numbers had been mandated by TRAI to be adopted within 1st March, 2026 for NBFCs having asset size less than Rs. 5000 crore and 1st January 2026 for NBFCs having asset size more than Rs. 5000 crore, it becomes important to understand whether all NBFCs are required to adopt this or the adoption is activity specific. In this article we discuss the implementation and adoption of the 1600 number series.
Objective
The Telecom Commercial Communications Customer Preference Regulations, 2018 (‘TCCCPR’) was brought in with the purpose of curbing unsolicited commercial communications and towards ensuring that all customer communications are made through verified and approved numbers. Pursuant to this TRAI brought in the Notification to complement its earlier issued notification dated 23 December, 2024, for government and entities in the BFSI sector (including NBFCs), suggesting a phased-wise adoption plan for using the 1600 series numbers. Further, TRAI also clarified in its Notification that adoption of 1600 series by BFSI entities will:
“(a) be a major tool to curb promotional calls made in the guise of service and transactional calls, which often result in spam and potential scams; and;
(b) provide BFSI entities a distinct identity segregating them from other callers and will also enable consumers to make informed decisions regarding call acceptance;”
Pursuant to the TRAI notification on phase-wise adoption of 1600-series by BFSI sector entities, regulated by RBI, SEBI and PFRDA (‘Notification’), the RBI on 17 January, 2025 mandated all NBFCs (including HFCs) to use the ‘1600xx’ numbering series for the purpose of making any transaction/service calls. Further, under the Circular, the RBI also clarified that the use of 1600 series numbers would help in curbing online and other frauds for the BFSI customers.
Compliance Requirement
The requirement towards adoption of the 1600 number series for making transactional and service calls stems from the requirement of Regulation 3 of the TCCCPR which states that:
“Commercial communications through network of Access Providers.-
(1) Every Access Provider shall ensure that any commercial communication using its network takes place only using registered headers or the number resources allotted to the Senders from special series assigned for the purpose of commercial communication.
(2) No Sender, who is not registered with any Access Provider for the purpose of sending commercial communications under these regulations, shall make any commercial communication, and in case, any such Sender sends commercial communication, all the telecom resources of such Sender may be put under suspension or may also be disconnected as provided under these regulations”
Further the term “commercial communication” has been defined under Regulation 2(i) of the TCCCPR and is defined as:
“means any voice call or message using telecommunication services, where the primary purpose is to inform about or advertise or solicit business for
(A) goods or services; or
(B) a supplier or prospective supplier of offered goods or services; or
(C) a business or investment opportunity; or
(D) a provider or prospective provider of such an opportunity;
Explanation:
For the purposes of this regulation it is immaterial whether the goods, services, land or opportunity referred to in the content of the communication exist(s), is/are lawful, or otherwise. Further, the purpose or intent of the communication may be inferred from:
(A) The content of the communication in the message or voice call
(B) The manner in which the content of message or voice call is presented
(C) The content in the communication during call back to phone numbers presented or referred to in the content of message or voice call; or the content presented at the web links included in such communication.”
Hence “Service Call” as defined under Regulation 2(bh) of the TCCCPR falls under the definition of commercial communication.
Do all NBFCs need to comply?
The above obligation under Regulation 3 of TCCCPR applies only to entities acting as “senders” who initiate or cause such commercial communications using telecommunication services, regulated by TRAI, to a “customer”. This suggests that entities which:
- do not have any customer outreach or customer interface, or
- have customer outreach or customer interface functions; however, do not use any calling service regulated by TRAI for communicating with the customers
would not qualify as “Senders” under the TCCCPR. Consequently, the mandate requiring the use of the 1600 series would not be applicable to such entities in practice.
The core intent of the RBI and TRAI is fraud prevention through identification of legitimate BFSI transactional calls. While the mandates as stated in the Circular encompasses all NBFCs regulated by the RBI to adopt the 1600 series, regardless of the asset-size or activity, regulatory compliance is assessed on substance over form, that is to say, the obligation to adopt 1600 series comes into picture only when an NBFC proposes to engage in (or causes) servicing/transactional voice calls or SMS with its customers.
NBFCs with zero history of such communications or NBFCs who are not intending to engage in such communications utilizing the telecommunication service regulated by TRAI, pose no fraud vector through the usage of such communication channels and thus have no practical compliance burden. Therefore for such NBFCs, proactive adoption is neither required nor operationally relevant until customer-facing communications commence or the NBFCs wish to communicate with the customers, utilizing the telecommunication services regulated by TRAI.
Does this compliance mandate extend to transactions with group entities?
The requirement relating to the use of the 1600 series numbering framework under the TCCCPR must be interpreted in light of the regulatory purpose underlying the framework introduced by TRAI. The 1600 series numbering framework has been introduced primarily to enable recipients of service and transactional voice calls to distinguish legitimate communications from telemarketing calls and to mitigate risks associated with unsolicited commercial communications and telemarketing-related frauds. In the context of intra-group lending arrangements, service-related communications are undertaken pursuant to an existing commercial relationship between entities forming part of the same corporate group. Such communications are typically operational or administrative in nature, including communications relating to servicing, monitoring or administration of an existing lending facility. These communications arise from pre-existing contractual arrangements and are not directed towards outreach or solicitation of customers or members of the public.
It is also relevant to note that the concept of “customer interaction” in financial sector regulation is generally understood to refer to engagement with external counterparties in the ordinary course of a regulated entity’s business. Where the interaction is confined to entities within the same corporate group, particularly where there is overlap in shareholding, management or control, the relationship is fundamentally different from a typical lender-customer relationship involving members of the public. Such intra-group arrangements are internal or strategic in nature and do not involve the kind of public-facing engagement that ordinarily triggers consumer protection considerations.
Further, intra-group lending arrangements are typically bespoke and undertaken based on the specific funding requirements of the relevant group entity, rather than pursuant to standardized loan products offered to the market. The terms of such transactions are usually determined on a bilateral basis and may be subject to internal governance processes, including board-level or audit committee/credit committee for related party transactions, oversight applicable to related party transactions. Accordingly, the information asymmetry and imbalance of bargaining power that consumer-protection frameworks seek to address are generally absent in such arrangements.
In addition, communications between group entities are ordinarily carried out through established internal or pre-identified channels, given the ongoing commercial relationship and the shared governance structure within the corporate group. Consequently, the risk of telemarketing-related frauds or unsolicited commercial communications, one of the principal concerns that the 1600 series framework seeks to address, is significantly weakened in the case of intra-group interactions.
In light of the above, service-related communications undertaken by an NBFC with a group entity in connection with an existing intra-group lending arrangement may not ordinarily invoke the regulatory concerns that the 1600 series framework is intended to address. Hence, where loans are provided to group entities, for the purpose of engaging in service calls the requirement of adoption of 1600 series numbers may not be required.
To further mitigate the risk, if any, which may arise during the above transactional communications, BFSI sector entities may send all transactional and service-related messages to group entities (or other third-party borrowers) via official email IDs. This approach further ensures non-applicability of the 1600-series requirements under TCCCPR, as email communications operate outside TRAI-regulated telecom networks for voice calls and SMS. Official emails provide a verifiable, auditable trail-aligned with RBI’s emphasis on digital record-keeping—while minimizing fraud risks through domain-based authentication and internal governance protocols for related-party interactions.
Does the same logic apply to Wholesale/Non-retail Lending outside the group?
The rationale exempting intra-group transactions from the 1600-series requirement extends analogously to wholesale or non-retail lending to external corporate borrowers, where service and transactional communications occur through pre-identified single points of contact (SPOCs). Loan agreements in such arrangements explicitly designate SPOCs on both lender and borrower sides, establishing a closed-loop communication channel that eliminates the anonymity exploited by fraudsters in retail contexts.
This structure inherently mitigates the spam and scam risks targeted by TRAI/RBI mandates, as borrowers rely on contractual contact details rather than unverified calls. Consequently, imposing the 1600-series here would serve little practical purpose, as the pre-existing verification framework under commercial contracts aligns with the substance of TCCCPR’s fraud-prevention objectives. NBFCs engaged solely in such lending face no operational need for 1600 numbers unless expanding into public-facing retail activities.
That said, per the strict wording of the TCCCPR Regulations, “service calls” qualify as commercial communications under Regulation 2(bh) when made via regulated telecom networks, requiring use of registered headers or special series like 1600xx under Regulation 3 . Thus, while the logic may not align perfectly with fraud-prevention intent in closed SPOC setups, BFSI sector entities must comply to avoid penalties such as telecom resource suspension-prioritising form alongside substance.
Conclusion
While the 1600-series mandate imposes a uniform compliance layer on BFSI sector entities to combat fraud via identifiable transactional calls, its practical applicability hinges on actual customer-facing communications under TCCCPR. Entities without retail outreach or public interfaces bear no operational burden, as the regulation targets external “senders” exploiting telecom networks for solicitation or service interactions.
Intra-group transactions further fall outside this scope, given their internal, contractual nature devoid of consumer protection risks like information asymmetry or spam. Adoption also remains unnecessary for non-communicating entities, preserving regulatory substance over form.
Navigation Roadmap through New Consolidated RBI Directions – Presentation for NBFCs
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Some of our recent write up and videos on Master Directions and amendments/ draft proposals:
- Uneasy Ease: RBI Proposes Exemption in Approval Mode for Type I NBFCs
- Shastrarth 27: Type 1 NBFC Exemption
- From Consent to Compensation: RBI’s Draft Directions for REs on Sales Practices
- Presentation on Selling of Financial Products by Banks and NBFCs
- Selling of Financial Products by Banks and NBFCs (video)
- Credit Risk Management Rules modified: RBI brings revised norms on Related Party Lending and Contracting
- Shastrarth 26 – Loans to related parties by banks and NBFCs (Youtube video)
- Lending to your own: RBI Amendment Directions on Loans to Related Parties