RBI proposes deregistration window for NBFCs without public funds

The Reserve Financial institution of India (RBI) on Tuesday issued draft instructions proposing to exempt non-banking monetary firms (NBFCs) that don’t avail public funds and should not have a buyer interface, and have an asset measurement of lower than Rs 1,000 crore, from the requirement of registration with itself. These NBFCs might be tagged as “Unregistered Sort I NBFCs”.

Six-month timeline introduced for non-public fund, non-customer-facing NBFCs beneath draft norms

Having mentioned that, NBFCs not availing public funds and never having any buyer interface, with an asset measurement of Rs 1,000 crore and above, must search registration as ‘Sort I NBFC’ even when they don’t avail public funds and should not have a buyer interface, the RBI mentioned.

Current NBFCs falling beneath this class, together with these holding a certificates of registration as ‘Sort I NBFC’ as of April 1, 2026, and assembly the prescribed exemption standards, can apply to the central financial institution for deregistration inside six months, that’s, by September 30, 2026, it mentioned.

As per the scale-based regulatory framework, at present, ‘NBFCs not availing public funds and never having buyer interface’ are positioned within the ‘Base Layer’ of the regulatory construction and are topic to relaxed regulatory necessities.

“RBI has reviewed the regulatory framework for these NBFCs. Contemplating their peculiar enterprise mannequin and decrease danger profile, it has been determined that the ‘NBFCs not availing public funds and never having buyer interface’, with asset measurement of lower than Rs 1,000 crore, shall be exempted from registration requirement with the RBI,” it mentioned.

The RBI mentioned functions for deregistration have to be submitted by the ‘PRAVAAH’ portal on the corporate’s letterhead, together with paperwork together with the unique certificates of registration, audited monetary statements for the final three years, particulars of public funds and buyer interface, a statutory auditor’s certificates, board resolutions, and undertakings on future operations and disclosures.

Moreover, the central financial institution mentioned deregistration requests might be thought of topic to its satisfaction that the NBFC operates beneath a acutely aware enterprise mannequin without public funds or buyer interface.

NBFCs on this class with property of Rs 1,000 crore or extra might be required to hunt registration as ‘Sort I NBFC’, whereas these aspiring to entry public funds or have buyer interface should register as ‘Sort II NBFC’.

Unregistered Sort I NBFCs enterprise abroad investments in monetary providers will mandatorily require RBI registration and prior approval, and any violations will appeal to penal motion beneath the RBI Act, 1934.

Any ‘Unregistered Sort I NBFC’ aspiring to avail public funds and have buyer interface should search registration with the Reserve Financial institution as ‘Sort II NBFC’ previous to having both of those, to keep away from penal motion, the central financial institution mentioned.