RBI proposes exempting NBFCs under ₹1,000 crore assets from registration to ease compliance

Mumbai: The Reserve Bank of India (RBI) on Friday proposed exempting non-banking finance companies (NBFCs) with asset sizes below ₹1,000 crore from registration requirements with the central bank, reducing the compliance burden for these NBFCs that would also include some family offices.

These NBFCs do not avail public funds and do not have any customer interface and are, therefore, included within a lower systemic-risk profile, the RBI said. Not being registered with RBI will mean easier compliance for these firms, including yearly audits and submissions.

"It is proposed that such NBFCs with asset size not exceeding ₹1,000 crore, may be exempted from registration requirement with the RBI subject to certain specified conditions. The proposed exemption will reduce compliance requirements for these NBFCs. Accordingly, draft amendment directions will be issued shortly for feedback from stakeholders," the central bank said in a statement.


Prakash Agarwal, partner at Gefion Capital, said this will reduce compliance burden on smaller entities and give them greater operational flexibility. At the same time, it enables the RBI to sharpen its supervisory focus on large NBFCs.

"This relaxation is particularly beneficial for entities such as family offices and investment companies that do not access public funds. However, for smaller entities raising public funds, it could be more complex as not being registered with the RBI could potentially constrain access to fresh funding," Agarwal said.

Analysts said greater clarity is needed on the future regulatory and commercial positioning of these entities, including whether unregistered firms will continue to be classified as NBFCs. These details will be clear whenever the draft guidelines are released.

To be sure, not registering NBFCs would not have any significant impact on the market since they make up a small portion at present.

"Some small companies where there are related parties or other exposures could sidestep the registration requirement. We will have to see what the final guidelines are," said AM Karthik, co-group head, financial sector ratings, ICRA.