RBI eases norms for small NBFCs, exempts non-customer-facing firms

The Reserve Bank of India has eased compliance for low-risk NBFCs by exempting certain non-customer-facing firms from registration and proposing to drop prior approval norms for branch expansion

The Reserve Bank of India (RBI) on Friday said that non-banking financial companies (NBFCs) with no access to public funds and no customer interface, and with assets below ₹1,000 crore, will be exempted from registration with the RBI, aimed at reducing compliance requirements for these companies. The central bank also proposed to remove the requirement for certain NBFCs to seek prior approval before opening more than 1,000 branches.

 

What prompted RBI to exempt certain NBFCs from registration?

 

“Given their unique nature, a review of the regulations presently applicable to these NBFCs has been undertaken. Considering their significantly lower systemic-risk profile, it is proposed that such Type-I NBFCs with asset size not exceeding ₹1,000 crore may be exempted from registration requirement with the Reserve Bank, subject to certain specified conditions,” said Governor Sanjay Malhotra on Friday.

 

 

These measures form part of the RBI’s broader approach to ensure that smaller NBFCs can operate efficiently without compromising systemic stability, while the central bank continues to monitor liquidity and credit flows across the economy.

 

How will branch expansion rules change for NBFCs?

 

In view of the comprehensive prudential and governance framework applicable to NBFC–investment and credit companies (NBFC-ICCs), the RBI has proposed dispensing with the requirement of prior approval for opening branches by such NBFCs.

 

In the draft guidelines issued for stakeholder comments, the RBI said, “An NBFC is generally permitted to open branches without having the need to obtain prior approval from RBI, unless otherwise specifically restricted.” Stakeholders’ comments have been invited until February 27, 2026.