RBI Exempts Unregistered Type I NBFCs from Registration and Reserve Fund Requirements

The Reserve Bank of India has issued a notification granting a targeted exemption to a specific category of non-banking financial companies that operate without public funds and without any customer interface.

Notification Details

Vide Notification No. DoR.FIN.67/03.10.001/2026-27 dated 23rd June 2026, the Reserve Bank of India, in exercise of powers conferred under Section 45NC of the Reserve Bank of India Act, 1934, has declared that the provisions of Sections 45IA and 45IC of the Act shall not apply to an NBFC that does not avail public funds and does not have any customer interface. This category has been designated as an "Unregistered Type I NBFC."

Sections 45IA and 45IC of the RBI Act deal with the requirement of registration and maintenance of a reserve fund by NBFCs. The exemption therefore relieves qualifying entities from these two specific compliance obligations, though it is conditional in nature.

Conditions for Availing the Exemption

The exemption is available only where the following four conditions are cumulatively satisfied:

1. The NBFC operates without public funds and without customer interface, and this is its conscious and long-term business model.

2. Its asset size is less than ₹1,000 crore as per the last audited balance sheet.

3. It passes an annual Board Resolution at the beginning of the financial year affirming that the company will not avail public funds and will also not have customer interface during that year.

4. It discloses in the Notes to Accounts to its financial statements that it is an "Unregistered Type I NBFC," along with the status of public funds and customer interface.

Reference to Scale Based Regulation Directions

The notification clarifies that for the purposes of this exemption, all words and expressions used shall carry the same meaning as assigned to them under the Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Directions, 2025, dated 28th November 2025, as amended from time to time. Entities seeking to rely on this notification should therefore read it in conjunction with the definitions and framework laid down in the 2025 Directions.

Effective Date

This notification comes into force on 1st July 2026.

Compliance Implications

NBFCs that meet the above criteria should evaluate their eligibility carefully before treating themselves as exempt. The exemption is conditional and self-certifying in nature — it hinges on an annual Board Resolution and continued disclosure in the financial statements. A lapse in either requirement, or a change in business model involving access to public funds or customer interface, would take the entity outside the scope of this exemption. Companies availing this route are advised to maintain proper documentation of the Board Resolution passed at the start of each financial year and to ensure the disclosure language in the Notes to Accounts is consistent with the notification's requirements.