The regulator has requested public feedback on the draft guidelines by March 4, 2026. As per the draft norms, type-1 NBFCs have till September 2026 to apply for deregistration of their licenses.
“Existing eligible NBFCs that do not utilize public funds and also do not have a customer interface as their deliberate business model, with an asset size of less than ₹1,000 crore, may apply for deregistration within the stipulated period of six months, i.e. before September 30, 2026,” the RBI said.
‘Type-1 NBFC’ means that NBFC does not use public funds and has no customer interface and holds a registration certificate as ‘Type-1 NBFC’ issued by the Reserve Bank.
The RBI said that if Type-1 NBFCs wish to access public funds and/or have a customer interface, they will invariably apply for registration as ‘Type-2 NBFC’.
NBFCs wishing to apply for deregistration must ensure that they take an annual resolution from the Board of Directors that the company will not use public funds nor have any customer interface during the year.
Accountants of the NBFCs will file an ‘Exception Report’ with the regulator in case of violation of conditions in the area of public funds and/or customer interface.
Strict guidelines
According to Vinod Kothari, director, Vinod Kothari consultants, while deregistration will be difficult for NBFCs to complete their registration with the RBI, with the proposed guidelines, deregistration will also be equally difficult.
This is because the RBI has proposed that it will review the past three years’ financial statements of NBFCs that choose to apply for de-registration. In these annual accounts there may be no direct or “indirect” access to “public funds” (including loans from loans from directors/shareholders), nor may there be any provision of credit within the group or outside it.
The meaning of ‘customer interface’ has been clarified to say that it includes customer-facing activities such as making loans or providing guarantees, including to ‘entities in the Group’, its shareholders, its directors, or providing any other ‘product or service’ to a customer.
More importantly, money from any director/shareholder will be classified as ‘public’ funds, automatically excluding many NBFCs that raise money from their promoters. END
Published on February 10, 2026
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