RBI Circular on Non-Fund Based Credit Facilities 2025 [PDF]

The Reserve Bank of India (RBI) has introduced a new circular titled “Non-Fund Based Credit Facilities Directions, 2025”, aimed at standardizing and strengthening the rules around certain types of credit support that banks and financial institutions provide without directly disbursing funds. These include instruments like guarantees, letters of credit, and co-acceptances, which are essential tools used in business and trade to support transactions and ensure trust between parties.

Non-Fund Based (NFB) credit facilities help facilitate smooth financial operations and credit intermediation in sectors like trade and infrastructure. They allow borrowers to secure services or goods even without immediate cash outflows, with the assurance that the bank or financial institution will step in if required.

To bring uniformity in how these facilities are handled across all types of financial institutions regulated by the RBI, the central bank had released a draft version of the guidelines on April 9, 2025, and sought public feedback. After reviewing inputs and using its powers under various provisions of the Banking Regulation Act, 1949, the RBI Act, 1934, and the National Housing Bank Act, 1987, the RBI has now finalized and officially issued these guidelines as the RBI (Non-Fund Based Credit Facilities) Directions, 2025.

These new directions will be applicable to all entities regulated by the RBI—referred to as Regulated Entities (REs)—for their NFB exposures like guarantees, letters of credit, co-acceptances, unless any exceptions are specifically mentioned in the guidelines. The main aim is to ensure greater consistency, transparency, and risk control across the financial system, especially when it comes to supporting large-scale infrastructure financing and trade-related transactions.

Click here to download RBI Circular on Non-Fund Based Credit Facilities 2025