Less than 5% of Tata Capital book in revolving credit, says CEO Sabharwal

Less than 5% of Tata Capital Ltd’s loan book comprises revolving credit, chief executive Rajiv Sabharwal said on Tuesday, limiting the direct impact of the Reserve Bank of India’s (RBI) proposal to bar non-bank lenders from offering such facilities.

The company will submit its feedback on the proposal, Sabharwal said, adding that Tata Capital would comply with the final regulations.

“I think they (RBI) have given out a paper, I think they have asked for feedback, so we will give feedback, and we should talk once we know finally what the regulation is, and finally we will comply with whatever the regulation is,” Sabharwal said on the sidelines of a banking conference organized by the Federation of Indian Chambers of Commerce & Industry (Ficci) and the Indian Banks’ Association (IBA).

The RBI last week proposed that non-banking financial companies (NBFCs) be allowed to offer only term loans unless they hold a licence to issue credit cards. Under the November 2025 rules, NBFCs require RBI approval and a minimum net owned fund of ₹100 crore to issue credit cards.

The proposal could have a larger impact on some of its peers. According to estimates by Viral Shah, senior vice-president, equity research, at broking house IIFL Capital Services, revolving loans account for about 20% of Bajaj Finance's standalone assets under management (AUM). The share is estimated to be less than 1% for Cholamandalam Investment and Finance Co.

“It (share of such loans in total loan book) will be below 5%, it will be less, it's not a big percentage. It's more about a comprehensive product suite, nothing else,” said Sabharwal.

The RBI defines revolving credit as a credit facility that does not meet the definition of a term loan. A term loan, according to the central bank, refers to credit with a fixed principal amount, disbursed in one or more instalments and repaid on a pre-decided schedule. Unlike a revolving facility, its limit cannot be replenished after the whole or part of the principal is repaid.

Only two non-bank entities currently issue credit cards in India—SBI Cards and Payment Services Ltd, the credit card arm of State Bank of India, and BOBCARD, a subsidiary of Bank of Baroda.

The proposed restriction could nevertheless matter for lenders because revolving facilities allow borrowers to draw, repay and redraw funds from a pre-approved limit without undergoing fresh underwriting each time.

“I think…industry forums may also give feedback, but we are definitely going to give our feedback,” said Sabharwal.

Mint reported on 7 August, citing analysts at Sanford C. Bernstein (India), that such flexi-loan structures also offer greater repayment flexibility, including, in some cases, the ability to pay only interest for extended periods before principal repayment.