Module: General Practice
Q5: Consider the following statements regarding the proposed regulatory exemptions for NBFCs:
Statement 1: Non-Banking Financial Companies (NBFCs) are regulated by the RBI under the Scale Based Regulation (SBR) framework, which classifies them into Base, Middle, Upper, and Top layers based on systemic risk.
Statement 2: The RBI has proposed to completely exempt certain private NBFCs that neither access public funds nor have a customer interface from mandatory registration requirements.
Statement 3: To qualify for this registration exemption, the NBFC must have an asset size of less than ₹1,000 crore.
Statement 4: Eligible existing NBFCs can apply for de-registration through the PRAVAAH portal within a defined six-month window starting April 1, 2026.
Which of the above statements is/are correct?
Statement 2: The RBI has proposed to completely exempt certain private NBFCs that neither access public funds nor have a customer interface from mandatory registration requirements.
Statement 3: To qualify for this registration exemption, the NBFC must have an asset size of less than ₹1,000 crore.
Statement 4: Eligible existing NBFCs can apply for de-registration through the PRAVAAH portal within a defined six-month window starting April 1, 2026.
Which of the above statements is/are correct?
✅ Correct Answer: D
🎯 Quick Answer:
All statements are correct. (Option D)Structural Breakdown: The RBI regulates NBFCs to protect depositors and maintain systemic stability.
Entities that rely solely on self-funds (equity/promoter money) and do not interact with retail customers pose virtually zero systemic or consumer risk.
Historical / Static Context: Section 45-IA of the RBI Act, 1934, historically mandated that no NBFC could commence business without obtaining a Certificate of Registration (CoR) and holding a Net Owned Fund (NOF) of ₹2 crore, bringing even internal family investment companies under heavy regulatory scrutiny.
The Dynamic Update (NEW) & Data: In February 2026, the RBI announced a major "light-touch" regulatory shift.
The qualitative update exempts entities lacking public funds and customer interface from registering, effectively pulling them out of the Base Layer of the Scale Based framework.
The hard data conditions are strict: the entity's asset size must remain below ₹1,000 crore.
Existing entities meeting these criteria can de-register via the PRAVAAH portal during a six-month window from April 1, 2026, to September 30, 2026.