NBFCs with less than Rs 1,000 crore assets to get registration exemption
RBI to issue draft instructions on the proposed exemption soon
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Mumbai: Reserve Bank Governor Sanjay Malhotra on Friday proposed exempting smaller NBFCs, those with assets under Rs 1,000 crore and no public funds, from mandatory registration, citing their low systemic risk.
The Scale-Based Regulatory Framework for NBFCs envisages differential regulatory treatment for NBFCs that do not avail public funds and do not have any customer interface.
Given their unique nature, a review of the regulations presently applicable to these NBFCs has been undertaken.
Considering their significantly lower systemic-risk profile, it is proposed that such Type-I NBFCs with asset size not exceeding Rs 1,000 crore may be exempted from registration requirement with the Reserve Bank, subject to certain specified conditions, Malhotra said while announcing the last bi-monthly monetary policy for the current financial year.
The proposed exemption will reduce compliance requirements for these NBFCs. Accordingly, draft Amendment Directions will be issued shortly for feedback from stakeholders.
Besides, Malhotra said, it is proposed to dispense with the requirement for certain NBFCs to obtain prior approval to open more than 1000 branches.
As per extant regulatory requirement, NBFC - Investment and Credit Companies (ICCs) engaged in the business of lending against gold collateral with over 1,000 branches are required to obtain prior RBI approval for opening new branches. In view of the comprehensive prudential and governance framework applicable to NBFC-ICCs, he said it is proposed to dispense with the requirement of prior approval for opening branches by such NBFCs.
