RBI exempts small non-deposit taking NBFCs from registration requirement

Non-deposit-taking NBFCs, with an asset size of less than Rs 1,000 crore and not availing public funds, will be eligible for exemption from registration and reserve fund requirements from July 1, the Reserve Bank said on Wednesday. The central bank has issued a circular in this regard to reduce compliance requirements for such non-banking financial companies (NBFCs). ''NBFCs not availing public funds and not having any customer interface, and having asset size of less than Rs 1,000 crore as per the latest audited balance sheet are exempted from the provisions of sections 45IA and 45IC of the RBI Act, 1934...with effect from July 1, 2026,'' it said. Such existing NBFCs, including those holding Certificate of Registration as Type I NBFC, and fulfilling the prescribed criteria for exemption, can apply to the Reserve Bank for deregistration by December 31, 2026. While Section 45IA of the RBI Act is about the requirement of registration, Section 45IC states that NBFCs should create a reserve fund and transfer 20 per cent of their net profit every year into it. These NBFCs are statutorily required to seek registration as NBFC under section 45IA of the RBI Act, 1934, to date. The Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Amendment Directions, 2026, will come into effect from July 1, 2026. Earlier in February, the central bank had issued draft 'Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Amendment Directions, 2026, seeking comments/ feedback from the stakeholders. One of the suggestions on the draft was to remove the asset size limit and to exempt NBFCs with minuscule/ peripheral instances of customer interface, which the RBI did not accept. ''The asset size of Rs 1,000 crore is viewed as a threshold level for systemic significance requiring oversight of the Reserve Bank,'' it said. Further, the intent is to provide exemption only to those NBFCs having a conscious and long-term business model of operating without public funds and customer interface, it added.

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