RBI Eases Rules for Small NBFCs, Grants Exemptions from July 1, 2026

Current Context: The Reserve Bank of India has announced a major relaxation for small NBFCs, effective from July 1, 2026.

• NBFCs with an asset size below ₹1,000 crore, that do not access public funds and have no customer interface, will be exempted from certain compliance requirements.
• Specifically, exemptions apply to Section 45IA (registration requirement) and Section 45IC (reserve fund requirement) of the RBI Act, 1934.
• This means such NBFCs will no longer need to register with RBI or transfer 20% of their net profits annually into a reserve fund.
• Existing NBFCs meeting these conditions can also apply for deregistration by December 31, 2026, giving them an easier exit route.
• The RBI clarified that the ₹1,000 crore threshold is necessary to maintain oversight over systemically significant NBFCs, rejecting calls to remove this limit.
• While small NBFCs will benefit from reduced compliance costs and simplified operations, larger NBFCs will continue under full RBI regulation.
• This change has been formalized under the RBI (NBFC – Registration, Exemptions & Scale Based Regulation) Amendment Directions, 2026, reflecting the central bank’s intent to ease rules for smaller players while safeguarding financial stability.

Question:

Q.1 According to the Reserve Bank of India (RBI), Non-Banking Financial Companies (NBFCs) eligible for exemption must have an asset size below:
a) ₹500 crore
b) ₹750 crore
c) ₹1,000 crore
d) ₹2,000 crore

Answer: c) The Reserve Bank of India (RBI) has fixed ₹1,000 crore as the threshold to distinguish small NBFCs from systemically important ones.