The Reserve Bank of India (RBI) on Tuesday issued stringent draft guidelines pertaining to de-registration of type-1 non-banking finance companies (NBFCs) with less than ₹1,000 crore in assets.
The regulator has sought public feedback on the draft guidelines by March 4, 2026. According to the draft norms, type-1 NBFCs have time till September 2026 to apply for de-registration of their license.
“Existing eligible NBFCs not availing public funds and also not having customer interface as their conscious business model, with asset size of less than ₹1,000 crore may apply for de-registration within the stipulated timeline of six months i.e., by September 30, 2026,” the RBI said.
‘Type-1 NBFC’ means NBFC not availing public funds and not having any customer interface’ and holding Certificate of Registration as ‘Type-1 NBFC’ issued by the Reserve Bank.
The RBI said in case any type-1 NBFCs which intends to access public funds and/ or have customer interface, it shall invariably seek registration as ‘Type-2 NBFC’.
NBFCs who seek to apply for de-registration must ensure holding annual Board Resolution that the company will not avail public funds and will also not have customer interface during the year.
Auditors of the NBFCs shall submit an ‘Exception Report’ to the regulator in case of violation of conditions on public funds and/or customer interface.
Strict guidelines
According to Vinod Kothari, director at Vinod Kothari consultants, while it was difficult for NBFCs to get their registration done with the RBI, with the proposed guidelines, de-registration will also be equally tough.
This is because the RBI has proposed it will assess the last 3 years’ financial statements of NBFCs which opt to apply for de-regisgtration. In these financial statements, there must be no direct or “indirect” access to “public funds” (including loans from loans from directors/shareholders), nor should there be any lending within the group or outside.
The meaning of ‘customer interface’ has been clarified, saying it includes customer-oriented activity like lending or providing a guarantee, including to ‘entities in the Group’, its shareholders, its directors, or providing any other “product or service” to a customer.
More importantly, money from any director/shareholder will be classified as “public” funds, automatically barring many NBFCs who raise funds from their promoters. ENDS
Published on February 10, 2026