The Reserve Bank of India has introduced a revised framework enabling smaller non-banking financial companies with assets below ₹1,000 crore to potentially operate without mandatory RBI registration, signalling a significant regulatory shift.
The Reserve Bank of India has opened a narrower route for some smaller non-banking financial companies to step outside its registration net, marking a significant shift for firms that do not borrow from the public or deal directly with customers. Under the revised framework, as reported by Business Today and explained in an RSM India newsflash dated 19 August 2026, NBFCs with assets below ₹1,000 crore can in some cases operate without RBI registration if they meet those conditions.
The change took effect on 1 July 2026 and creates an exit path for existing eligible firms. Companies that already hold a Type I certificate of registration and fall below the threshold can apply to deregister by 31 December 2026. If approved, they will be reclassified as Unregistered Type I NBFCs, with applications required to include the prescribed documents, according to the reports.
The exemption is not limited to companies that already qualify. RSM India said NBFCs that do not meet the conditions today but do so later may seek deregistration at that point. The key test is both size and activity: a firm below the ₹1,000 crore mark still loses the exemption if it starts accessing public funds or develops a customer interface.
By contrast, larger businesses face a hard line. NBFCs with assets of ₹1,000 crore or more must secure RBI registration as Type I NBFCs, even if they remain privately funded and do not interact with customers. The RBI’s FAQs, as cited by RSM India, also indicate that new companies intending to stay permanently outside public funding and customer-facing activity do not need registration until they cross the threshold.
The framework has particular consequences for investment and holding companies, as well as wider corporate groups with NBFC arms. RSM India said such entities should review registration status, asset size, funding structures, the continuing need for registration and intra-group transactions. It also noted that any company planning overseas investment in financial services must first obtain RBI registration and will be treated as a Type I NBFC, while overseas investment in the non-financial sector is not permitted under the framework.
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