RBI Eases NBFC Norms for Smaller Shadow Banks

Reserve Bank of India has introduced regulatory relief for smaller non-banking financial companies (NBFCs) by simplifying compliance requirements and branch expansion norms. 

Regulatory Relief for Smaller NBFCs 

On February 6, 2026, RBI governor Sanjay Malhotra announced that NBFCs without public funds and direct customer interface, with asset size not exceeding ₹1,000 crore, will not have to register with the RBI.  

This move will reduce compliance burden for smaller finance companies and fintech lenders operating in niche segments. 

Simplified Branch Expansion Norms 

The RBI has also simplified branch expansion norms for certain NBFCs. Previously, NBFCs were required to obtain prior RBI approval before opening more than 1,000 branches.  

This requirement will now be dispensed with for eligible entities, cutting red tape and enabling quicker scaling of operations. 

Monetary Policy Context 

The announcements came against the backdrop of the RBI's decision to keep key policy rates unchanged at 5.25%, with the Monetary Policy Committee retaining a neutral stance on monetary policy. The decision comes amid benign inflation and easing worries over US tariffs after budget measures. 

Read More: RBI Keeps Repo Rate Unchanged at 5.25%: MSF, SDF Also Remains Same! 

Conclusion 

The RBI has implemented targeted regulatory measures for smaller NBFCs through registration exemptions and simplified branch expansion norms. These changes aim to reduce compliance burden while maintaining financial stability in the non-banking financial sector. 

Disclaimer: This blog has been written exclusively for educational purposes. The securities or companies mentioned are only examples and not recommendations. This does not constitute a personal recommendation or investment advice. It does not aim to influence any individual or entity to make investment decisions. Recipients should conduct their own research and assessments to form an independent opinion about investment decisions. 

Investments in the securities market are subject to market risks, read all the related documents carefully before investing.