New Delhi: The RBI on Tuesday proposed to exempt non-deposit-taking non-banking financial companies, with an asset size of less than Rs 1,000 crore, from registration and classify them as Type-I NBFCs with an aim to reduce compliance requirements.
In a draft circular, the RBI proposed that NBFCs 'not availing public funds and not having customer interface’, with asset size of less than Rs 1,000 crore, would be exempted from registration requirement with the central bank, because of the peculiar business model and lower risk profile.
"....(such NBFCs) are exempted from the provisions of section 45IA of the RBI Act, 1934 in terms of paragraph 66A of these Directions w.e.f. April 01, 2026," said the draft Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Amendment Directions, 2026.
These NBFCs were statutorily required to seek registration as NBFC under section 45IA of the RBI Act, 1934 till date.
In an 'FAQ' on the subject, RBI said such NBFCs would be categorised as ‘Unregistered Type I NBFCs’.
"However, these companies operate without accessing public funds and without having customer interface and their asset size is less than Rs 1,000 crore, due to which the regulatory concerns on systemic risk and customer protection issues are not relevant in case of these NBFCs," RBI said.
These companies, it said, normally undertake investments out of their own funds, and hence, their potential to pose systemic risk is very low.
"Therefore, it has been decided to grant them exemption from registration requirement with the Reserve Bank under section 45NC of the RBI Act, 1934. Such exempted NBFCs shall henceforth be referred to as ‘Unregistered Type I NBFCs’," it said.
The FAQ further said any ‘Unregistered Type I NBFC’ intending to avail public funds and/ or have customer interface must seek registration with the Reserve Bank as ‘Type II NBFC’ prior tohaving either of these, to avoid penal action.
As per extant norms, NBFCs are categorised as 'base layer', 'middle-layer', 'upper layer' and 'top layer' on basis of asset size.
Currently, NBFCs that do not avail public funds and do not have any customer interface are categorised as base layer NBFCs.
RBI has sought stakeholders comments on the draft directions by March 4.
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