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RENU SURESH

Expert

Published on: Jul 30, 2026

MCA Notifies Change in Rules for Loans and Guarantees by Companies – November 2025 Update

The Ministry of Corporate Affairs (MCA) has recently notified an important change impacting how companies handle loans, guarantees, and securities under the Companies Act, 2013. Through the Companies (Meetings of Board and its Powers) Amendment Rules, 2025, published in the Gazette of India on 3rd November 2025, the MCA has provided greater clarity on what qualifies as the “business of financing industrial enterprises.” This update is particularly relevant for Non-Banking Financial Companies (NBFCs) and Finance Companies operating in International Financial Service Centres (IFSCs).

What is Changing?

The Ministry of Corporate Affairs (MCA) has made a new change to the Companies (Meetings of Board and its Powers) Rules, 2014. This change, called the Companies (Meetings of Board and its Powers) Amendment Rules, 2025, was officially published in the Gazette of India on 3rd November 2025.

In simple terms, this amendment gives more clarity to what counts as a “business of financing industrial enterprises” under Section 186 of the Companies Act, 2013.


Why This Change?

Earlier, there was confusion about when companies—especially NBFCs (Non-Banking Financial Companies) or Finance Companies—can give loans, guarantees, or securities without needing special board or shareholder approvals under Section 186.

This amendment clearly spells out what activities will be considered part of a company’s normal financing business, so they don’t have to follow additional approval steps every time they issue loans or guarantees in their regular course of business.

What the New Rule Says

According to the new amendment (Rule 11(2)), the government has defined “business of financing industrial enterprises” more clearly for two types of companies:

1. For NBFCs Registered with the RBI:

  • It now includes giving loans, providing guarantees, or offering securities for repayment of any loan, if done in the ordinary course of business.

In simple words, NBFCs can continue to provide loans or guarantees to clients as part of their usual business—this is now officially recognized under the law.

2. For Finance Companies Registered with IFSCA (International Financial Services Centres Authority):

  • It includes financial activities allowed under the International Financial Services Centres Authority (Finance Company) Regulations, 2021—like lending, providing guarantees, and other permitted financing activities.

This helps finance companies operating in IFSCs (like GIFT City, Gujarat) to continue their financial operations with legal clarity and fewer compliance hurdles.

What Section 186 Means 

Section 186 of the Companies Act deals with how companies can:

  • Give loans
  • Offer guarantees
  • Provide securities
  • Make investments in other companies

Normally, companies need board and sometimes shareholder approvals for such transactions. However, some companies like NBFCs and IFSC finance companies are exempt, because financing is their main business.

This amendment makes that exemption clear and precise.

What This Means for Businesses

  • NBFCs and Finance Companies – You can continue to give loans and guarantees as part of your normal business without worrying about non-compliance under Section 186.
  • Corporate Clarity – The law now clearly defines what counts as "financing activity," reducing confusion during audits or MCA inspections.
  • Ease of Doing Business – The amendment ensures simpler, faster business operations for financial institutions, aligning with India’s push toward regulatory clarity.

What Companies Should Do Now

  • NBFCs and IFSC-based Finance Companies: Review your loan and guarantee policies and ensure they align with this new clarification.
  • Corporate Legal Teams: Update compliance manuals and internal checklists under Section 186.
  • Company Boards: No fresh resolutions are needed if activities are part of normal financing operations.

In Summary

This is a positive move by the MCA to remove ambiguity and simplify compliance for financial companies. It ensures that legitimate lending and guarantee activities by NBFCs and IFSC finance companies are not unnecessarily restricted under company law.

Ensure Compliance with MCA's New Rules – Get Expert Help from IndiaFilings!  

For professional advice on how the MCA Amendment Rules, 2025 affect your company’s financing activities, it’s best to consult a Chartered Accountant (CA). Our CA can guide you through the compliance process and ensure your business is aligned with the latest regulations. Get in touch with our qualified CA today to stay compliant and secure your business operations.  


Related Guides:

Taking Loan from Company

Non-Banking Financial Companies (NBFC)

Business Loan Without Collateral in India

Back to Learn

Frequently Asked Questions

Common questions about MCA Loan and Guarantee Rules Update 2025 for NBFCs.

The MCA has notified certain changes in the rules relating to loans and guarantees by companies under the Companies Act, 2013, which will come into effect from November 1, 2023. The key changes include exemptions from the requirement of passing a special resolution for lending money or providing guarantees if certain conditions are met, as well as enhanced disclosure requirements for such loans and guarantees in the financial statements.
The new rules notified by the Ministry of Corporate Affairs (MCA) for loans and guarantees by companies will come into effect from November 1, 2023.
Companies are exempted from the requirement of passing a special resolution in a general meeting for lending money to another body corporate if the aggregate amount of loans, investments, and guarantees or securities provided does not exceed certain limits based on the company's paid-up share capital, free reserves, and securities premium account.
Companies are exempted from the requirement of passing a special resolution in a general meeting for giving guarantees or providing security in connection with a loan to another body corporate or person if the aggregate amount for which such guarantees or securities have been given, along with the proposed guarantee or security, does not exceed certain limits based on the company's paid-up share capital, free reserves, and securities premium account.
Every company giving a loan or guarantee or providing security must disclose the details of such loans, guarantees given, and securities provided, along with the purpose for which the loan or guarantee or security is proposed to be utilized by the recipient, in the financial statements.
The changes are aimed at providing greater ease of doing business and promoting the principle of facilitating incorporation of corporate entities with less regulatory burden, according to an official release.
Yes, the exemptions from passing a special resolution for lending money or providing guarantees are subject to limits based on certain percentages of the company's paid-up share capital, free reserves, and securities premium account, as specified in the new rules.
The new rules notified by the Ministry of Corporate Affairs (MCA) regarding loans and guarantees by companies apply to companies governed under the Companies Act, 2013. However, the article does not provide specific information on whether there are any exceptions or variations for different types of companies.
The enhanced disclosure requirements for loans and guarantees by companies, which mandate disclosing details and the purpose of such transactions in the financial statements, are likely aimed at promoting transparency and accountability in corporate governance.
The article does not provide any specific information regarding penalties or consequences for non-compliance with the new rules related to loans and guarantees by companies. However, companies are generally expected to comply with the applicable rules and regulations under the Companies Act, 2013.