New Delhi: The Reserve Bank of India (RBI) has proposed to exempt certain non-deposit-taking non-banking financial companies (NBFCs) with an asset size of less than ₹1,000 crore from registration, classifying them as ‘Unregistered Type-I NBFCs’. The move aims to reduce compliance burdens on smaller NBFCs with low risk profiles and no customer interface.
Key Proposal Details
In a draft circular, RBI stated that NBFCs “not availing public funds and not having customer interface” and with assets under ₹1,000 crore will no longer need to register under Section 45IA of the RBI Act, 1934.
- The exemption will come into effect from April 1, 2026.
- These NBFCs will be referred to as Unregistered Type-I NBFCs.
- Such entities typically operate using their own funds, reducing systemic risk and regulatory concerns.
Currently, these companies were required to register with the RBI despite their limited scale and low risk, a requirement that will now be waived under the new proposal.
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Conditions and Compliance
While Unregistered Type-I NBFCs will enjoy exemption, RBI clarified:
- Any company intending to access public funds or interact with customers must register as a Type-II NBFC before doing so.
- Failing to register under these conditions may lead to penal action.
The central bank highlighted that these smaller NBFCs usually have a “base layer” classification under the current scale-based framework, which is based on asset size. The new framework will formally recognise them as a distinct category.
Objective: Reduce Compliance Burden for Low-Risk NBFCs
RBI noted that the exemption is intended to:
- Lower regulatory and compliance requirements for smaller NBFCs
- Recognize their lower risk profile
- Allow them to operate more efficiently without unnecessary oversight
By focusing regulatory attention on NBFCs with public interface or systemic risk potential, RBI aims to streamline the financial ecosystem and encourage growth among smaller non-banking entities.
Stakeholder Feedback
The RBI has invited comments from stakeholders on the draft directions by March 4, 2026, before finalising the framework for Unregistered Type-I NBFCs.
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