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RBI Eases NBFC Rules to Boost Business, Exempts Small Firms from Registration

The Reserve Bank of India has proposed significant regulatory easing for Non-Banking Financial Companies to promote ease of doing business. Key proposals include exempting smaller NBFCs with no public interface from mandatory registration and removing prior approval requirements for opening branches beyond 1000. The announcement comes as sector data shows strong health, with high capital adequacy ratios and improving asset quality. RBI Governor Sanjay Malhotra stated the moves aim to reduce compliance burdens while the economy maintains high growth amid a challenging external environment.

Key Points: RBI Proposes Eased Norms for NBFCs to Boost Ease of Doing Business

  • Exempts registration for small NBFCs
  • Removes branch expansion approval cap
  • Sector shows robust capital adequacy
  • Asset quality improves year-on-year
2 min read

RBI eases norms for NBFCs to boost ease of doing business

RBI Governor announces regulatory easing for small NBFCs, exempting registration for firms under ₹1000 crore with no public funds, citing robust sector health.

"NBFCs having no public funds and customer interface... are proposed to be exempted from the requirement of registration. - Sanjay Malhotra"

New Delhi, February 6

The Reserve Bank of India proposed significant regulatory easing for Non-Banking Financial Companies to promote ease of doing business while maintaining strong sectoral growth.

RBI Governor Sanjay Malhotra, delivering the Monetary Policy Statement, stated, "NBFCs having no public funds and customer interface, with asset size not exceeding Rs 1000 crore, are proposed to be exempted from the requirement of registration. Moreover, it is proposed to dispense with the requirement for certain NBFCs to obtain prior approval to open more than 1000 branches."

"The system-level financial parameters related to capital adequacy, liquidity, asset quality and profitability of Scheduled Commercial Banks (SCBs) continue to remain robust," Malhotra said. He noted that the system-level parameters of NBFCs are also sound, characterised by an adequate capital position and improved asset quality.

Data from the Monetary Policy Statement indicated that the total Capital to Risk-Weighted Assets Ratio (CRAR) of NBFCs stood at 25.11 per cent in September 2025. The Tier I CRAR was recorded at 23.27 per cent during the same period, which remains well above the minimum regulatory requirements. This capital cushion supports the stability of the shadow banking sector amid changing market conditions.

The quality of assets within the NBFC sector also demonstrated a positive trend over the last year. The Gross Non-Performing Asset (GNPA) ratio improved to 2.21 per cent in September 2025, down from 2.57 per cent in September 2024. Similarly, the Net Non-Performing Asset (NNPA) ratio saw a decline from 1.04 per cent in September 2024 to 0.99 per cent in September 2025. While asset quality and capital levels improved, the Return on Assets (RoA) for the sector decreased slightly during this timeframe.

"Similarly, the system-level parameters of NBFCs too are sound, with adequate capital position and improved asset quality," Malhotra said. The proposed exemptions for smaller NBFCs without public interface aim to reduce the compliance burden on entities that pose minimal systemic risk.

"The Indian economy continues to register high growth despite a challenging external environment clouded by geo-political uncertainties. Benign inflation provides the leeway to remain growth-supportive while preserving financial stability," the RBI Governor said.

- ANI

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Reader Comments

R
Rohit P
Good move, but hope the RBI keeps a close watch. Exempting registration for some is fine, but we must ensure there is no misuse. The last thing we need is another IL&FS type situation. Trust but verify should be the mantra.
A
Aditya G
The numbers look solid – CRAR above 25% is impressive. It shows our shadow banking system is resilient. This regulatory easing, combined with strong fundamentals, should definitely boost credit flow to the real economy. Jai Hind!
S
Sarah B
As someone working in fintech, this is welcome news. The prior approval for branches was a major bottleneck. Now NBFCs can expand their reach to smaller towns and villages more easily. This is true ease of doing business.
K
Karthik V
While the intent is good, I have a small critique. The article mentions RoA has decreased slightly. We must ensure that in the pursuit of growth and easing norms, profitability and sustainable business models are not compromised. Long-term health is key.
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Meera T
Improving GNPA and NNPA ratios are the best part of this news. It means the sector is becoming more disciplined. When NBFCs are healthy, it benefits everyone from a small vendor taking a loan to a big company. Thumbs up RBI!

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