New Delhi, Aug. 20 -- The Reserve Bank of India (RBI) has recently floated two draft rules that could change how fintech firms offer small loans. One sets a common loan-pricing framework, while the other would restrict lending of non-banking financial companies (NBFCs) to term loans instead of revolving credit.

These norms could have a bearing on fintechs with NBFC licences and lending service providers (LSPs). Mint explains how the rules could change the way fintechs price, structure and distribute small loans.

The draft interest-rate directions, released on 12 August, would require RBI-regulated lenders to follow a board-approved policy for setting loan rates. These loan rates would have two parts: a benchmark, or the lender's base re...