Mumbai, February 10 The RBI proposed on Tuesday 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 the aim of reducing compliance requirements.
In a draft circular, the RBI proposed that NBFCs "not availing public funds and not having customer interface," with an asset size of less than Rs 1,000 crore, would be exempted from registration requirements with the central bank, due to their unique 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, effective April 01, 2026," stated 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 NBFCs under section 45IA of the RBI Act, 1934, until now.
In an "FAQ" on the subject, the RBI said that such NBFCs would be categorized 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. Therefore, regulatory concerns regarding systemic risk and customer protection issues are not relevant for these NBFCs," the RBI said.
These companies, it said, normally undertake investments using their own funds, and therefore, their potential to pose systemic risk is very low.
"Therefore, it has been decided to grant them exemption from registration requirements 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 stated that 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 to doing so, in order to avoid penal action.
As per extant norms, NBFCs are categorized as "base layer," "middle layer," "upper layer," and "top layer," based on asset size.
Currently, NBFCs that do not avail public funds and do not have any customer interface are categorized as "base layer" NBFCs.
The RBI has sought comments from stakeholders by March 4.