Some of India’s smaller nonbank financiers have been getting a bit too creative lately. And that has led the Reserve Bank of India to consider restricting the access to financing needed by self-employed professionals and small business owners.
Revolving credit — which allows people to borrow money up to a set limit, pay it back and borrow again — is a goalpost zealously guarded by banks. Allowing nonbanks unfettered access could encourage borrowers to pay interest to one lender by dipping into their so-called flexi loan with another. Rinsed and repeated, this might lead to the evergreening of bad debt.
