RBI’s ₹1,000-crore NBFC threshold: Which finance companies can now escape registration?

The Reserve Bank of India (RBI) has introduced a new exemption framework that could allow certain non-banking financial companies (NBFCs) with assets below ₹1,000 crore to operate without registration, provided they do not access public funds or have any customer interface.

The revised framework took effect from July 1, 2026, following amendments to RBI’s Master Directions on registration, exemptions and Scale Based Regulation for NBFCs. The framework is aimed at entities that operate without public funds and customer-facing activities.

According to an RSM India Newsflash dated August 19, 2026, the revised exemption framework could allow certain non-banking financial companies (NBFCs) with assets below ₹1,000 crore to operate without registration, provided they do not access public funds or have any customer interface.

Who can avoid RBI registration?

Under the revised framework, existing eligible NBFCs with an asset size below ₹1,000 crore can apply to the RBI for deregistration, subject to the prescribed conditions. This includes entities that currently hold a Type I Certificate of Registration (CoR).

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The deadline for existing eligible NBFCs to apply for deregistration is December 31, 2026. Following deregistration, these entities will be classified as Unregistered Type I NBFCs, with the application required to be accompanied by prescribed documents.

The exemption is also not restricted to entities that qualify immediately. According to RSM India, NBFCs that do not meet the exemption criteria currently but fulfil the conditions in the future can apply for deregistration at that stage.

₹1,000 crore becomes the key threshold

The asset-size threshold is central to determining whether registration is required. NBFCs with assets of ₹1,000 crore or above will have to obtain RBI registration as a Type I NBFC, even if they continue to operate without public funds and without a customer interface.

RBI’s FAQs, as cited by RSM India, also clarify that new companies intending to operate on a conscious and long-term basis without public funds and customer interface do not need to seek registration until their asset size reaches ₹1,000 crore.

This makes the exemption conditional on both size and business activity. A smaller entity cannot rely on the ₹1,000-crore threshold if it begins accessing public funds or develops a customer interface.

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Registration needed if activities change

Companies that intend to access public funds or have a customer interface will need to obtain registration as a Type II NBFC before undertaking such activities.

The framework also sets specific requirements for overseas investments. An entity proposing to undertake overseas investment in financial services must first obtain RBI registration and will be regulated as a Type I NBFC. Applicable overseas investment requirements, including prior RBI approval, will also apply. Overseas investment in the non-financial sector is not permitted under the framework.

Investment and holding companies need to reassess status

The revised framework could have particular significance for investment and holding companies and corporate groups with NBFC entities, RSM India said. Such entities may need to review their existing registration status, asset size, funding arrangements, continuing need for NBFC registration and intra-group activities.

RSM India has advised NBFCs and groups to undertake an entity-level as well as group-level assessment to determine the appropriate registration status and whether any registration or deregistration requirements arise under the revised framework.

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