The Reserve Bank of India has amended its NBFC registration and scale based regulation framework to exempt NBFCs that do not avail public funds and do not have customer interface from the registration and reserve fund provisions of the Reserve Bank of India Act, 1934 if their asset size is below INR 1,000 crore. Effective July 1, 2026, the changes formalise three categories for this segment: Type I NBFCs for registered firms in this business model, Unregistered Type I NBFCs for exempt firms, and Type II NBFCs for all other registered NBFCs. Existing eligible firms, including those already holding a Certificate of Registration as Type I NBFC, may apply through PRAVAAH for deregistration by December 31, 2026. Eligibility requires a conscious and long term business model of operating without public funds and without customer interface, an annual board resolution, disclosures in the notes to accounts, and auditor certification, while statutory auditors must file exception reports if conditions are breached. The amendments also clarify that indirect receipt of public funds includes funds received through associates and group entities, and that where a group has multiple Unregistered Type I NBFCs their asset sizes must be aggregated for the INR 1,000 crore threshold. NBFCs in this category with asset size of INR 1,000 crore or more must apply for registration as Type I NBFCs, and any firm that intends to access public funds or have customer interface must obtain Type II registration. Unregistered Type I NBFCs remain subject to other applicable provisions of Chapter IIIB of the Reserve Bank of India Act, 1934, and must be registered before undertaking overseas investment in the financial services sector. The Reserve Bank of India has also amended a range of other NBFC directions so that related regulatory relaxations now refer specifically to NBFCs holding a Certificate of Registration as Type I NBFC.
Reserve Bank of India 2026-04-29
Reserve Bank of India exempts NBFCs below INR 1,000 crore with no public funds or customer interface from registration and creates Type I and Type II categories
The Reserve Bank of India has amended its NBFC registration and scale-based regulation framework to exempt NBFCs with no public funds, no customer interface and asset size below INR 1,000 crore from registration and reserve fund requirements, and to formalise three categories: Type I NBFCs, Unregistered Type I NBFCs and Type II NBFCs. The amendments set eligibility, disclosure and audit conditions for Unregistered Type I NBFCs, clarify that indirect public funds include group and associate funding with group-wide asset aggregation for the INR 1,000 crore threshold, and require larger or customer-facing firms to obtain Type I or Type II registration. Related directions now specify that regulatory relaxations apply only to NBFCs holding a Type I Certificate of Registration.