New Delhi, May 27 -- The Reserve Bank of India has issued new directives requiring finance companies to exclude default loss guarantees provided by fintech firms when calculating provisions for stressed loans.

The central bank's communication, sent to finance companies in May, mandates the removal of credit enhancements under default loss guarantee arrangements from expected credit loss computations effective March 31, 2025, with implementation required by September 30.

Non-banking finance companies will now be required to make full regular provisions on loans sourced from digital lending platforms, a change that industry experts anticipate will reduce the appeal of such partnerships for new business generation.

Some NBFCs have already...