RBI Relaxes Branch Expansion Norms for NBFCs Under New Guidelines

The Reserve Bank of India has issued revised directions allowing non-banking financial companies (NBFCs) to open branches without prior approval in most cases, as per news reports.  

The changes, notified under the ‘Non-Banking Financial Companies – Branch Authorisation Directions, 2026’, are effective immediately. 

The earlier framework required certain categories of NBFCs to seek permission or provide advance intimation before expanding their branch network. The revised rules remove this requirement except where specific restrictions apply. 

Draft Stage and Final Changes 

The central bank had released draft norms earlier in 2026 and invited comments from stakeholders until February 27. It said the feedback received has been examined and incorporated into the final directions, with details set out in an annexure. 

The updated framework also brings changes to related regulations, including the ‘Non-Banking Financial Companies – Acceptance of Public Deposits Directions, 2025’ and the ‘Housing Finance Companies Directions, 2025’. 

Conditions for Deposit-Taking NBFCs 

A graded approach continues for deposit-taking NBFCs, with expansion limits tied to net owned funds (NOF) and credit ratings. 

NBFCs with NOF of up to ₹50 crore or with ratings below AA can open branches or appoint agents only within the state where they are registered. Entities with NOF above ₹50 crore and a rating of AA or higher are permitted to operate across India. 

Those with NOF exceeding ₹50 crore but rated below AA will remain restricted to their home state. 

Changes for Core Investment Companies 

The RBI has also modified provisions relating to core investment companies (CICs). Under earlier rules, the regulator could direct such entities to close overseas representative offices in cases of non-compliance. 

The revised framework allows the RBI to review or withdraw approvals granted for these offices instead. 

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Conclusion 

The revised directions remove prior approval requirements for most NBFC branch expansion while retaining limits linked to financial position and credit rating. 

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