RBI Proposes Exemption for Small Non-Deposit NBFCs from Registration

• RBI proposes to exempt non-deposit taking NBFCs with asset size less than Rs 1,000 crore from registration.
• These NBFCs, not availing public funds and without customer interface, will be classified as Type-I NBFCs.
• The exemption aims to reduce compliance requirements due to their peculiar business model and lower risk profile.
• The draft directions, effective April 1, 2026, will categorize them as 'Unregistered Type I NBFCs'.
• Such NBFCs wishing to avail public funds or have customer interface must register as 'Type II NBFC' to avoid penalties.