Article · ~15 min read

Digital Lending Business in India: RBI Guidelines and Compliance

IncorpX Free Beginner India

Before you can model revenue, you have to understand the rules that decide what revenue is even allowed, and this guide lays out the RBI framework in plain founder language. It explains the September 2022 digital lending circular, the 5 percent cap on FLDG (and that it must be real cash or a bank guarantee, not a soft promise), the LSP and DLA roles for founders without their own license, and the NBFC registration path with actual cost and timeline estimates. Read it as the regulatory foundation, then pressure-test your assumptions against it.

  • You either register as an NBFC (about 2 crore minimum net owned funds, a multi-month RBI process) or partner with a regulated entity as a Lending Service Provider.
  • FLDG (your promise to cover early defaults) is now capped at 5 percent of the sourced portfolio and must be held as cash, deposit, or bank guarantee.
  • Funds must flow directly between the borrower and the regulated lender, which shapes how and where a platform can legitimately earn its fees.
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The question it answers

  1. How does a lending or fintech startup actually make money in India, beyond just interest?

Read with it

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