RBI relaxes regulations for non-banking financial companies
What's the story
The Reserve Bank of India (RBI) has announced a set of regulatory reforms aimed at non-banking financial companies (NBFCs). The new measures were unveiled by RBI Governor Sanjay Malhotra during the central bank's Monetary Policy Committee (MPC) statement on February 6. The reforms are part of a broader strategy to promote sustainable credit growth while ensuring stability in the financial sector.
Regulatory relief
Deregulation push for small NBFCs
One of the major reforms is a deregulation push for smaller NBFCs. The RBI has exempted NBFCs without public funds and direct customer interface, with total assets not exceeding ₹1,000 crore, from registering with the central bank. This move is expected to ease compliance burdens on many small finance companies and fintech lenders operating in niche segments of the market.
Operational ease
Simplified branch expansion norms
The RBI has also simplified branch expansion norms for certain NBFCs. Previously, these companies had to seek prior approval from the RBI before opening more than one branch. However, this requirement has now been waived off for eligible entities. The move is aimed at reducing red tape and enabling faster scaling of operations in the financial sector.
Monetary policy
MPC keeps key policy rates unchanged
The announcement of the regulatory reforms comes as the RBI has decided to keep its key policy rates unchanged. The MPC has maintained a neutral stance on monetary policy amid benign inflation and easing concerns over US tariffs after budget measures to boost manufacturing and exports, and a trade deal with Washington.