Top NBFCs seek RBI nod to raise retail deposits

MUMBAI: Large non-banking finance companies (NBFCs) have urged the central bank to allow them to raise deposits from retail investors-a move they say would create a level playing field among finance companies and improve transmission of policy rates, people familiar with the matter told ET.This request was conveyed by select finance companies to the Reserve Bank of India (RBI) governor Sanjay Malhotra, during a closed-door meeting held on Monday.Except for a few NBFCs with legacy licences, most NBFCs are barred from raising retail deposits. Bajaj Finance, Shriram Finance, and Mahindra Finance are among the few NBFCs that are permitted to accept retail deposits. The governor met the CEOs of NBFCs, housing finance companies, microfinance institutions, and industry representatives on Monday.To be sure, the RBI has long resisted demands from well-rated NBFCs to be allowed to garner retail deposits, something that is the funding mainstay for banks. 126381374"The critical issue here is that bank deposits, up to Rs 5 lakh, are insured by DICGC or Deposit Insurance and Credit Guarantee Corporation, unlike NBFC deposits. That is one of the concerns preventing the regulator from issuing new deposit-taking licences to finance companies," said an economist, who declined to be named. "The regulator would always err on the side of caution."NBFCs that are allowed to raise deposits face strict limits. Retail deposits can't exceed 1.5 times their net owned funds. The term deposits must have tenures ranging from 12 to 60 months, and interest rates are capped at 12.5% per annum.As of March 2025, retail deposits accounted for about 12.5% of resources deposits raised by NBFCs-D, the RBI said in its annual Trend and Progress report. The report noted that five major NBFC-Ds account for 96.9% of aggregate deposits.Speaking to ET, Jairam Sridharan, MD of Piramal Finance, hinted that while NBFCs seek a stable liability structure, few aspire for a banking licence that would allow retail deposit mobilisation."Few NBFCs have the skills to do deposit management. It's a very different ballgame than giving customers your money. Asking customers for their money requires trust and a certain level of fiduciary abilities internally in governance architectures. Maybe there are 10 or 12 NBFCs which have anything close to that kind of ability, the remaining 9,500 probably don't have it," Sridharan said in an interview on November 6, 2025.