Notes on lending and compliance

An LOS is everything before the loan exists — lead, party, KYC, collateral, bureau, underwriting, approval, documentation, disbursement. What each stage owns, what separates one that survives an audit, and where it hands over to the LMS.

Guide · 2026-09-02 · 7 min read

A loan is standard until it is ninety days overdue. On day 91 it becomes an NPA and is sub-standard. It stays there twelve months in the Middle and Upper Layers, eighteen in the Base Layer, and then turns doubtful. This works through each stage — what triggers it, what the layer changes, when security matters and when it does not — and then follows one ₹40 lakh loan through all of them.

Accounting · 2026-08-30 · 12 min read

The category says what an NBFC does. The layer says how much regulation it gets. They are separate questions with separate answers, every NBFC carries one of each, and the reason it feels like a contradiction is that they arrived seven years apart. Also: what happened to NBFC-ND-SI.

Regulatory · 2026-08-30 · 8 min read

The honest comparison — what spreadsheets do well for a small loan book, the five specific points at which they stop working for an NBFC, what breaks first, and how to migrate without losing the history.

How-to · 2026-08-12 · 8 min read

Six requirements that land inside an NBFC's systems rather than its policy files: how a loan is classified, what happens to income once it turns, why a penal amount is a charge and not interest, what the Key Facts Statement must contain, what the 2025 gold Directions changed, and the returns that follow from all of it.

Guide · 2026-08-12 · 11 min read

LOS, LMS, core lending, accounting, collections and reporting — what each layer does, where the seams are, what a modern NBFC stack looks like, and how to decide what to buy as one system and what to integrate.

Guide · 2026-08-12 · 8 min read

Income recognition on non-performing assets — why accrued interest is reversed to suspense at classification, what receipt-basis recognition means in the ledger, how a later payment should be applied, and the half of the rule most systems never implement.

How-to · 2026-08-12 · 7 min read

The RBI digital lending guidelines in operational terms — who may hold the money, what a lending service provider may and may not do, the KFS and cooling-off requirements, co-lending mechanics, and what each of these means in the loan management system.

Guide · 2026-08-12 · 7 min read

What a loan management system actually has to handle for an Indian NBFC — origination, servicing, IRAC classification, penal charges, accounting and RBI returns — how to decide between building and buying, and the questions that separate a demo from a system you can run a book on.

Guide · 2026-08-12 · 11 min read

What goes into a KFS, how the annual percentage rate is computed and what it must include, the clause that stops a lender recovering an undisclosed charge, the vernacular requirement, and why a typed APR eventually contradicts the schedule beside it.

How-to · 2026-08-12 · 8 min read

Building a collections process that holds up: demand generated from due events, allocation that reflects risk, field receipts that appropriate identically to branch receipts, and a record that survives the question of who was contacted and how.

How-to · 2026-08-12 · 7 min read

What actually constrains a growing NBFC — not the software, usually — and what breaks in order as the book goes from one branch to many: reconciliation, classification, access control, reporting and the audit trail.

How-to · 2026-08-12 · 7 min read

Managing a loan book means being able to answer five questions at any moment — what is out, what is due, what is deteriorating, what is concentrated, and what it is earning. How to build each view so they agree with each other.

How-to · 2026-08-12 · 7 min read

Running gold, property, vehicle and unsecured lending on one platform without four code paths — what varies by product, what must never vary, and how to tell configuration from a hard-coded product name.

How-to · 2026-08-12 · 7 min read

Which returns an NBFC files, what each one is built from, why a return assembled in a spreadsheet will eventually disagree with the ledger, and how to make every figure traceable back to the accounts that produced it.

How-to · 2026-08-12 · 8 min read

A structured way to evaluate a lending platform — the requirements that actually differentiate, the demo questions that separate depth from a slide deck, how to score vendors, and the contract terms an NBFC needs because of the outsourcing directions.

How-to · 2026-08-12 · 7 min read

Penal charges after 1 April 2024: how to compute them, why they are not interest, what that means for capitalisation, compounding and the general ledger, and how the borrower's statement and the trial balance can honestly show different numbers.

How-to · 2026-08-12 · 8 min read

Automating SMA and NPA staging under RBI norms: what has to be computed nightly, why overdue means demanded-and-unpaid, the upgrade rule that catches most systems out, and how to check whether your classification and your ledger read the same rows.

How-to · 2026-08-12 · 9 min read

What to automate between lead and disbursement — deduplication, KYC, bureau, eligibility, the approval matrix, documentation — and what must remain a judgement. The stages, the controls, and where automation quietly removes a check nobody meant to remove.

How-to · 2026-08-12 · 7 min read

What gold loan software has to handle after the RBI's 2025 directions — the valuation reference, LTV monitoring, dual custody, the seven-working-day return clock, part-release, renewal and auction — and the questions to ask a vendor.

How-to · 2026-08-12 · 9 min read

An honest survey of the loan management platforms Indian NBFCs evaluate — what each positions itself as, on public information — plus the questions that decide between them and why a ranked list is the wrong shape for this decision.

Guide · 2026-08-12 · 7 min read

The September 2024 review named specific practices across banks and NBFCs. Two of them are the kind a lender's own system either prevents or quietly permits.

Supervision · 2026-08-11 · 6 min read

The special mention buckets are derived from the same day-end DPD that drives NPA classification, and they are reported to the regulator. What each bucket means, why the first boundary is day one, and why the transition dates matter more than the balances.

Regulatory · 2026-08-11 · 7 min read

Scale-Based Regulation put every NBFC in one of four layers. The layer is not a label — it decides governance, disclosure and, since 2025, whether you may levy a prepayment charge at all.

Regulatory · 2026-08-11 · 6 min read

Every transaction ties, the totals do not, and somebody posts a rounding-difference journal that grows every month. What actually causes it, how to test for it in an afternoon, and what it costs if it is left alone.

Accounting · 2026-08-11 · 6 min read

Paragraph 5(i) binds every lender. Paragraph 5(ii) names entity classes and omits the Base Layer. And 'MSE' is not the same as 'not an individual'.

Regulatory · 2026-08-11 · 7 min read

The Reserve Bank's position on outsourcing by NBFCs is consistent across a decade of instruments, and the 2024 gold loan review showed what happens when it is treated as a formality.

Compliance · 2026-08-11 · 5 min read

Recognition switches to receipt basis, and income already taken on the account has to come back out in the year of classification. The mechanics are simple; the timing, the status check and the audit trail are where implementations go wrong.

Accounting · 2026-08-11 · 7 min read

Every charge recovered from the borrower goes into it. The common errors are the fee that was deducted at disbursement and the charge that was collected by a third party.

Regulatory · 2026-08-11 · 6 min read

LTV maintained on an ongoing basis, a 12-month cap on bullet consumption loans, renewal only on a standard account with accrued interest paid, and a prescribed valuation reference. Also: the provision that was in the draft and was dropped, and the subject the Directions do not address at all.

Regulatory · 2026-08-11 · 8 min read

Product masters change. Loans sanctioned under the old terms must keep them, and the only reliable way is to snapshot the terms onto the loan at sanction rather than resolve them through a table years later.

Engineering · 2026-08-11 · 8 min read

Classification is a question about the close of a named day. A lending system that compares timestamps in UTC gets every date on an Indian book wrong by up to five and a half hours — which is a whole day at the month end.

Engineering · 2026-08-11 · 7 min read

The Credit Information Reporting Directions, 2025 set a fortnightly cycle. For NBFCs an amendment goes further from July 2026 — four reference dates a month plus a full file.

Reporting · 2026-08-11 · 6 min read

The arrangement is commercially attractive and operationally unforgiving. The share, the classification and the customer interface all have to be unambiguous before the first disbursement.

Operations · 2026-08-11 · 6 min read

The Companies Act sets the floor for every NBFC. Electronic records carry conditions that are easy to fail without noticing, and eight years is longer than most systems are designed for.

Compliance · 2026-08-11 · 6 min read

The statutory requirement is an edit log of every change, with the prior value, not capable of being disabled. Most systems record that something changed; far fewer record what it was before. How to test yours in ten minutes.

Compliance · 2026-08-11 · 8 min read

What the KFS has to contain, how the annual percentage rate is actually computed, and the three mistakes that show up most often.

Regulatory · 2026-08-10 · 6 min read

Why penal amounts stopped being interest, what that means for compounding, capitalisation and the general ledger, and what it implied for existing agreements.

Regulatory · 2026-08-10 · 7 min read

Retention under the Companies Act, what it means for a lending system's data model, and why soft delete is not a design preference.

Regulatory · 2026-08-10 · 6 min read

IRAC classification is computed on the day-end position. What that means for a report run at 11am, and what it does to a month-end close.

Regulatory · 2026-08-10 · 6 min read

Collection efficiency, DCB, static pool and vintage analysis — what they are, why all four get asked for, and what a portfolio-level number hides.

Operations · 2026-08-10 · 6 min read