RBI Proposes Regulatory Easing for NBFCs Amid Robust Growth

The Reserve Bank of India is introducing significant regulatory relaxations for Non-Banking Financial Companies (NBFCs) to streamline operations while ensuring sectoral stability. RBI Governor highlighted exemptions for smaller NBFCs and noted improved asset quality and capital adequacy. Despite global uncertainties, the Indian economy maintains strong growth with financial stability.

The Reserve Bank of India (RBI) has unveiled plans for regulatory easements aimed at Non-Banking Financial Companies (NBFCs) to bolster ease of business operations and maintain solid growth within the sector. RBI Governor Sanjay Malhotra, in his Monetary Policy Statement, announced the exemption of NBFCs, which have no public funds or customer interaction, and assets not exceeding Rs 1000 crore, from mandatory registration. Additionally, certain NBFCs will no longer require prior approval to expand by opening more than 1,000 branches.

Governor Malhotra also reported the continued robustness of Scheduled Commercial Banks (SCBs) in regard to capital adequacy, liquidity, asset quality, and profitability. The Monetary Policy Statement revealed that NBFCs have an overall Capital to Risk-Weighted Assets Ratio (CRAR) of 25.11 percent as of September 2025, with Tier I CRAR at 23.27 percent, surpassing minimum regulatory benchmarks. This capital reserve ensures that the shadow banking sector remains stable despite evolving market dynamics.

Asset quality within the NBFC sector is on an upswing, as indicated by a reduction in Gross Non-Performing Assets (GNPA) to 2.21 percent in September 2025 from 2.57 percent the previous year. Net Non-Performing Assets (NNPA) also fell to 0.99 percent from 1.04 percent. Although asset quality and capital levels showed improvement, Return on Assets (RoA) decreased marginally. The regulatory reliefs for smaller NBFCs aim to lessen compliance pressures on those posing minimal systemic threats. Despite geopolitical tensions, India's economy continues to show growth, supported by tame inflation and sound financial frameworks, emphasized the RBI Governor.

(With inputs from agencies.)