Reserve Bank to exempt NBFCs with less than Rs 1,000 cr assets from mandatory registration

Mumbai: Reserve Bank Governor Sanjay Malhotra on Friday proposed exempting smaller non-banking financial companies (NBFCs) with assets below Rs 1,000 crore and no public funds from mandatory registration, citing their low systemic risk.

Announcing the final bi-monthly monetary policy of the financial year, Malhotra said the Scale-Based Regulatory Framework allows differentiated regulation for NBFCs without public funds or customer interface.

Following a review, the RBI has proposed exempting such Type-I NBFCs from registration, subject to specified conditions.

Draft amendment directions will be issued shortly for stakeholder feedback.

The move is expected to ease compliance burdens. In another proposal, the Reserve Bank of India plans to remove the requirement for certain NBFCs to seek prior approval to open more than 1,000 branches.

Currently, NBFC–Investment and Credit Companies (ICCs) engaged in gold-loan lending must obtain Reserve Bank’s approval for branch expansion beyond this threshold.

Given the robust prudential and governance framework applicable to these entities, the RBI proposes to dispense with this requirement, with draft instructions to follow.

Commenting on the announcements, Shriram Finance Executive Vice Chairman Umesh Revankar said the proposals would reduce compliance friction and allow management to focus more on credit delivery and risk management.

He added that the Reserve Bank’s comfort with the sector’s capital, asset quality and liquidity supports a greater role for NBFCs in extending credit to smaller businesses and vehicle operators beyond metro

areas.

Malhotra also said the RBI will issue comprehensive revised guidelines for the Lead Bank Scheme (LBS) after reviewing existing norms.

The updated framework will clearly define objectives and operational aspects, with a draft circular to be released for public consultation.

A unified portal for bank-wise Lead Bank Scheme data reporting will also be launched to improve data quality and insights.