RBI proposes deregistration window for NBFCs without public funds

The Reserve Bank of India has proposed exempting certain NBFCs from registration and allowing eligible non-public fund, non-customer-facing entities to seek deregistration within six months

The Reserve Bank of India (RBI) on Tuesday issued draft directions proposing to exempt non-banking financial companies (NBFCs) that do not avail public funds and do not have a customer interface, and have an asset size of less than Rs 1,000 crore, from the requirement of registration with itself. These NBFCs will be tagged as “Unregistered Type I NBFCs”.

 

Six-month timeline announced for non-public fund, non-customer-facing NBFCs under draft norms

 

Having said that, NBFCs not availing public funds and not having any customer interface, with an asset size of Rs 1,000 crore and above, will have to seek registration as ‘Type I NBFC’ even if they do not avail public funds and do not have a customer interface, the RBI said.

 

 

Existing NBFCs falling under this category, including those holding a certificate of registration as ‘Type I NBFC’ as of April 1, 2026, and meeting the prescribed exemption criteria, can apply to the central bank for deregistration within six months, that is, by September 30, 2026, it said.

 

As per the scale-based regulatory framework, currently, ‘NBFCs not availing public funds and not having customer interface’ are placed in the ‘Base Layer’ of the regulatory structure and are subject to relaxed regulatory requirements.

 

“RBI has reviewed the regulatory framework for these NBFCs. Considering their peculiar business model and lower risk profile, it has been decided that the ‘NBFCs not availing public funds and not having customer interface’, with asset size of less than Rs 1,000 crore, shall be exempted from registration requirement with the RBI,” it said.

 

The RBI said applications for deregistration must be submitted through the ‘PRAVAAH’ portal on the company’s letterhead, along with documents including the original certificate of registration, audited financial statements for the last three years, details of public funds and customer interface, a statutory auditor’s certificate, board resolutions, and undertakings on future operations and disclosures.

 

Additionally, the central bank said deregistration requests will be considered subject to its satisfaction that the NBFC operates under a conscious business model without public funds or customer interface.

 

NBFCs in this category with assets of Rs 1,000 crore or more will be required to seek registration as ‘Type I NBFC’, while those intending to access public funds or have customer interface must register as ‘Type II NBFC’.

 

Unregistered Type I NBFCs undertaking overseas investments in financial services will mandatorily require RBI registration and prior approval, and any violations will attract penal action under the RBI Act, 1934.

 

Any ‘Unregistered Type I NBFC’ intending to avail public funds and have customer interface must seek registration with the Reserve Bank as ‘Type II NBFC’ prior to having either of these, to avoid penal action, the central bank said.