The Reserve Bank of India (RBI) has proposed major regulatory relief for a specific category of non-banking financial companies (NBFCs).
The move is aimed at reducing compliance pressure on low-risk entities while supporting easier business operations.
These changes reflect the RBI’s confidence in the sector’s financial strength and its intent to fine-tune rules based on actual risk levels.
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Big Relief for Small, Low-Risk NBFCs
The RBI Governor said that under the scale-based regulatory framework, NBFCs are treated differently depending on their size, funding source, and customer interaction.
For Type-I NBFCs that do not use public funds and do not deal directly with customers, the RBI is reviewing existing rules.
Given their low systemic risk, the RBI has proposed that such NBFCs with assets up to Rs 1,000 crore may not need to register with the RBI, subject to certain conditions.
This proposal could significantly reduce regulatory hurdles for smaller NBFCs focused mainly on investments.
Lower Compliance Burden Ahead
According to the RBI, exempting these NBFCs from registration will ease compliance requirements and simplify operations.
Draft amendment directions will be released soon to invite feedback from industry stakeholders.
Market participants have welcomed the proposal, calling it a major step toward encouraging innovation and flexible business structures in the NBFC space.
Easier Branch Expansion for Gold Loan NBFCs
The RBI also plans to relax branch expansion rules for NBFCs involved in the gold loan business.
Under the proposed change, NBFC-Investment and Credit Companies will no longer need prior RBI approval to open new branches, even if they already operate more than 1,000 branches.
This is expected to help such firms expand faster and reach more customers.
Industry experts believe this will improve ease of doing business and promote healthy competition among NBFCs.
Strong Financial Health of NBFCs
The RBI highlighted that NBFCs are financially stable and well-capitalised.
As of September 2025, the overall Capital to Risk-Weighted Assets Ratio (CRAR) stood at 25.11%, while Tier I CRAR was 23.27%, both well above regulatory requirements.
Asset quality has also improved.
The Gross NPA ratio declined to 2.21% in September 2025 from 2.57% a year earlier.
Net NPAs also fell slightly during the same period.
While profitability, measured by Return on Assets, saw a small dip, the overall health of the sector remains strong, giving the RBI confidence to ease regulations without increasing systemic risk.