Module: General Practice
Q6: Consider the following statements regarding the new classification of Type I NBFCs:
Statement 1: The definition of "Customer Interface" for NBFCs focuses on direct public engagements, such as sourcing retail borrowers, communicating loan terms, or addressing consumer grievances.
Statement 2: Under the new draft, NBFCs that do not avail public funds but have an asset size of ₹1,000 crore or more are also exempt from registration to ease their compliance burden.
Statement 3: To apply for de-registration, the entity must prove it has operated without public funds or customer interface for the past three financial years.
Statement 4: Eligible un-registered entities will be classified as "Unregistered Type I NBFCs," significantly reducing their annual statutory audit and reporting submissions to the RBI.
Which of the above statements is/are correct?
Statement 2: Under the new draft, NBFCs that do not avail public funds but have an asset size of ₹1,000 crore or more are also exempt from registration to ease their compliance burden.
Statement 3: To apply for de-registration, the entity must prove it has operated without public funds or customer interface for the past three financial years.
Statement 4: Eligible un-registered entities will be classified as "Unregistered Type I NBFCs," significantly reducing their annual statutory audit and reporting submissions to the RBI.
Which of the above statements is/are correct?
✅ Correct Answer: B
🎯 Quick Answer:
Statements 1, 3, and 4 are correct. Statement 2 is incorrect. (Option B)They function primarily as holding companies or private investment vehicles.
Structural Breakdown: The RBI distinguishes between the source of funds and the size of the entity.
While a lack of public funds removes retail risk, massive asset sizes still present a macroeconomic footprint, warranting continued monitoring.
Historical / Static Context: Previously, even if an NBFC did not deal with the public, it had to undergo rigorous compliance, CIC reporting, and KYC norms if it breached basic registration thresholds.
The Dynamic Update (NEW) & Data: The RBI's February 2026 draft introduces the "Unregistered Type I NBFC" category for entities under the threshold.
However, if an NBFC has no public funds but its asset size crosses the ₹1,000 crore mark, it is not exempt; it must mandatorily register as a 'Type I NBFC' (making Statement 2 incorrect). Furthermore, to successfully de-register, the company's board must pass a resolution and prove a three-year historical track record of operating without public funds or a customer interface.