Core banking and loan management software for NBFCs and MFIs
By LCode Technologies · Updated
In short
NBFCs and microfinance institutions need software that runs the whole loan lifecycle while meeting RBI rules on core financial services, digital lending and microfinance. LCode Technologies' Prosper (Digital CBS), launched in 2017, combines loan origination, loan management, collections and a legal module for NPA recovery, and supports 15 loan types including gold and microfinance loans.
Key facts
| Who this covers | Non-banking financial companies (NBFCs) and microfinance institutions (MFIs) |
|---|---|
| RBI regulatory layers | Base, Middle, Upper and Top Layer under scale-based regulation [1] |
| CFSS requirement | Middle and Upper Layer NBFCs with 10 or more fixed point service delivery units [2] |
| Digital lending rules for NBFCs | Chapter III of the RBI NBFC Credit Facilities Directions, 2025 [3] |
| Relevant LCode products | Prosper (Digital CBS), with D-Secure for mobile app security |
Which LCode products fit nbfcs and mfis?
| Need | LCode product | What it provides |
|---|---|---|
| A loan origination system for faster, paperless approvals | Prosper (Digital CBS) | A loan origination system with AI-enabled KYC document extraction, digital KYC and AML verification, a configurable business rule and decisioning engine, and multiple products and schemes. |
| Co-lending with banks and other lenders | Prosper (Digital CBS) | Co-lending support that works with multiple originators and lenders. |
| A loan management system for servicing and repayments | Prosper (Digital CBS) | A loan management system with real-time EMI processing integrated with auto-debit, UPI and digital wallets, and fixed, floating and reducing-balance interest. |
| Field collections and NPA recovery | Prosper (Digital CBS) | Loan tracker and collections on mobile and web, plus a legal module that tracks NPA accounts and generates recall, possession and sale auction notices. |
| Securing borrower and staff mobile apps | D-Secure Mobile App Security | Runtime application self-protection with root, jailbreak, tampering and debugger detection, SSL pinning and replay attack protection. |
How does RBI's scale-based regulation classify NBFCs?
RBI places NBFCs in four layers: Base, Middle, Upper and Top. The layer depends mainly on asset size, whether the NBFC takes deposits and the activity it carries out, and higher layers face stricter requirements [1].
- Base Layer: includes non-deposit taking NBFCs with assets below ₹1,000 crore [1].
- Middle Layer: all deposit-taking NBFCs whatever their size, non-deposit taking NBFCs with assets of ₹1,000 crore and above, and NBFCs such as standalone primary dealers, IDF-NBFCs, core investment companies, housing finance companies and infrastructure finance companies [1].
- Upper Layer: NBFCs that RBI specifically identifies each year as warranting enhanced regulatory requirements [1].
- Top Layer: expected to remain empty [1].
Which NBFCs must implement a Core Financial Services Solution (CFSS)?
NBFCs in the Upper and Middle Layers with 10 or more fixed point service delivery units must implement a Core Financial Services Solution, akin to the core banking solution adopted by banks. Smaller Middle and Upper Layer NBFCs and Base Layer NBFCs may consider it [2].
RBI's 2026 supervisory Directions say the CFSS shall provide a seamless customer interface for digital offerings with anywhere, anytime access, integrate the NBFC's functions and provide a centralised database [2]. Administrative and back offices without a direct customer interface are not counted as fixed point service delivery units, and the NBFC furnishes a quarterly progress report on CFSS implementation to its RBI Senior Supervisory Manager [2].
Whether a particular system meets RBI's CFSS expectations depends on its scope and the NBFC's own assessment. This summary is general information, not legal or compliance advice.
What RBI digital lending and microfinance rules affect loan software?
For NBFCs, RBI's digital lending rules sit in Chapter III of the NBFC Credit Facilities Directions, 2025, and microfinance loans are defined by household income and capped by a household repayment limit [3].
- Chapter III on digital lending covers NBFC–lending service provider arrangements, conduct and customer protection, technology and data requirements, reporting of credit information and digital lending apps, and loss sharing arrangements [3].
- A microfinance loan is a collateral-free loan to a household with annual household income up to ₹3,00,000 [3].
- A household's loan repayment obligations are limited to a maximum of 50 per cent of monthly household income [3].
- An NBFC-MFI is a non-deposit taking NBFC with at least 60 percent of its total assets, net of intangible assets, deployed in microfinance loans on an ongoing basis [4].
What should an NBFC or MFI check when choosing NBFC lending software or microfinance software?
Check product coverage, how origination hands over to servicing, co-lending and digital lending controls, household income and repayment checks for microfinance, collections and legal recovery, and whether the system can grow into a CFSS as your NBFC scales.
- Products: every loan type you offer today and plan to launch.
- Digital lending controls: disbursement and repayment flows, customer protection and reporting that match Chapter III of the Credit Facilities Directions [3].
- Microfinance checks: capturing household income and computing repayment obligations against the 50 per cent limit [3].
- Co-lending: splitting loans, collections and reporting between partners.
- Recovery: collections on mobile, NPA tracking and legal notice workflows.
- Scale: centralised data and digital channels as your branch network grows towards the CFSS threshold [2].
Frequently asked questions
Which LCode product is built for NBFCs and microfinance institutions?
Prosper (Digital CBS) is LCode Technologies' digital core banking solution for NBFCs and microfinance institutions, launched in 2017. It covers loan origination, loan management, loan tracking and collections, and a legal module for NPA recovery.
Which NBFCs must implement a Core Financial Services Solution (CFSS)?
Under RBI's 2026 supervisory Directions, NBFCs in the Upper and Middle Layers with 10 or more fixed point service delivery units shall implement a CFSS, akin to a bank's core banking solution. Other NBFCs may consider it. NBFCs report CFSS implementation progress quarterly to their RBI Senior Supervisory Manager.
What is a microfinance loan under RBI rules?
A collateral-free loan to a household with annual household income up to ₹3,00,000. A household's total loan repayment obligations are capped at 50 per cent of its monthly household income.
What share of assets must an NBFC-MFI hold in microfinance loans?
At least 60 percent of total assets, net of intangible assets, on an ongoing basis, under RBI's NBFC Microfinance Institution Directions, 2025.
Can Prosper be used as gold loan software or microfinance software?
Yes. Gold loans and microfinance loans are among the 15 loan types Prosper supports, alongside MSME, personal, auto, education and loan against property, so NBFCs and MFIs can run those products on its loan origination and loan management systems.
Does Prosper support co-lending?
Yes. Prosper's loan origination system supports co-lending and works with multiple originators and lenders.
Which loan types does Prosper support?
Prosper supports 15 loan types: auto, gold, MSME, personal, microfinance, BNPL, agri and equipment, education, working capital, business, consumer durables, two-wheeler, loan against property, loan against deposit and car lease.
Book a demo
See how LCode's software works for nbfcs and mfis. Tell us about your institution and the products you are evaluating.
Related guides
Sources
- Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Directions, 2025 (RBI/DOR/2025-26/339, 28 Nov 2025) — Reserve Bank of India
- Reserve Bank of India (Non-Banking Financial Companies – Miscellaneous) Supervisory Directions, 2026 (RBI/DoS/2026-27/467, 31 Jul 2026) — Reserve Bank of India
- Reserve Bank of India (Non-Banking Financial Companies – Credit Facilities) Directions, 2025 (RBI/DOR/2025-26/347, 28 Nov 2025, updated 15 Jul 2026) — Reserve Bank of India
- Reserve Bank of India (Non-Banking Financial Companies – Microfinance Institution) Directions, 2025 (RBI/DOR/2025-26/371, 28 Nov 2025) — Reserve Bank of India