India, March 17 -- A recent decision by the Reserve Bank of India (RBI) could provide a much-needed spark for electric two- and three-wheeler financing in the country. On February 16, RBI restored the recognition of Default Loss Guarantees (DLGs) for non-banking finance companies (NBFCs), reversing a restriction it introduced in 2025. The move will reduce NBFCs' financial burden, im-prove their collaboration with financial technology (fintech) companies and increase money flow in the credit sector.

DLG is essentially a risk-sharing arrangement between an NBFC and a fintech or digital lender. Examples of such partnerships include KreditBee-KrazyBee NBFC, Fibe-InCred and PayU-IDFC First Bank. Under these collaborations, the fintech sources...