DFS to Meet on NBFC Bank Licence Reforms on February 26, 2026

The Department of Financial Services convened a meeting on Thursday, February 26, 2026, to consider reforms that could allow non banking financial companies to obtain bank licences. 

Key Agenda Items for NBFC Bank Licence Consideration 

Senior officials from the Finance Industry Development Council, Sa Dhan and the Microfinance Industry Network attended the session. The agenda lists governance reforms such as clearer leadership rotation, a comprehensive reform index for NBFCs and the possibility of converting large NBFCs with assets of ₹50,000 crore and above into banks. 

KYC Streamlining, Gold Loan Branch Licensing and Risk‑Weight Alignment 

Discussions will focus on simplifying know your customer processes, easing branch licensing requirements for gold loan NBFCs and aligning risk weights of NBFCs with those applied to banks. 

Read More: Airtel to Invest ₹20,000 Crore to Build Large Digital NBFC Platform! 

Bond Haircut Reduction and Credit Rating Based Grading 

Current haircuts on bonds stand at 50%. The forum proposes lowering the haircut and grading bond valuation based on credit ratings, which could improve liquidity for NBFC issuers. 

Digital Payments Intelligence Platform Using AI and Cybersecurity 

A proposal to launch a digital payments intelligence platform that leverages artificial intelligence and cybersecurity aims to detect and prevent fraud across the sector. 

Regulatory Context and Recent Developments 

The meeting follows the Union Budget FY27 suggestion to set up a high level committee on banking for Viksit Bharat and the RBI’s decision to pause new banking licences. An internal working group report from November 2020 recommended that large corporate owned NBFCs be eligible for bank conversion, a view still under review. 

Conclusion 

The DFS meeting on February 26, 2026 addresses several regulatory measures that could reshape the role of large NBFCs, including governance changes, risk weight alignment and the introduction of an AI powered payments monitoring system. 

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