The Reserve Bank of India has restructured how non-banking financial companies are classified, basing registration requirements on public funding access, customer interface and asset size rather than activity type.

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• The RBI issued Amendment Directions to its NBFC Registration, Exemptions and Framework for Scale Based Regulation Directions, 2025, notified on April 29, 2026.
• The changes came into force from July 1, 2026, and replace the earlier system of classifying NBFCs by activity type, such as NBFC-ICC, NBFC-MFI and NBFC-Factor.
• Under the new framework, every NBFC falls into one of two categories: Type I, which does not access public funds or have a customer interface, or Type II, which does either.
• A further sub-category, "Unregistered Type I NBFC," covers entities with an asset size below Rs 1,000 crore that also have no public funds or customer interface.
• Such Unregistered Type I NBFCs are exempted from the registration requirement under Sections 45-IA and 45-IC of the RBI Act, 1934.
• Type I NBFCs with an asset size of Rs 1,000 crore or above must still obtain a certificate of registration from the RBI.
• The RBI has clarified that indirect receipt of public funds through group entities or associates will also be treated as public funds, tightening oversight of fund flows.
• Existing registered NBFCs meeting the Unregistered Type I criteria can apply for voluntary deregistration within six months, by December 31, 2026, through the RBI's PRAVAAH portal.
• Deregistration applications must include three years of audited financial statements, auditor certification and a board resolution confirming no future plans to access public funds or customer interface.
• An NBFC must revert to registration as a Type II NBFC if it later accesses public funds, gains customer interface, or crosses the Rs 1,000 crore asset threshold, whichever comes first.
• The reform is aimed at rationalising regulatory oversight and reducing compliance costs for smaller, low-systemic-risk NBFCs.