The RBI has relaxed compliance requirements for Non-Banking Financial Companies (‘NBFCs’), some of which are as follows:

1. Reclassification of NBFCs: (a) Type I NBFC which is an NBFC not availing public funds (at present or in the future), having no customer interface (at present or in the future) and having an asset size of INR 1,000 crore (approx. USD 104.77 million) or above; (b) Type II NBFC which is an NBFC availing public funds (at present or in the future) and/or having customer interface (at present or in the future); and (c) Unregistered Type I NBFC which is an NBFC not availing public funds (at present or in the future), having no customer interface (at present or in the future) but having an asset size of less than INR 1,000 crore (approx. USD 104.77 million );
2. Registration of NBFCs: Type I NBFCs and Type II NBFCs are required to hold a Certificate of Registration (‘CoR’) issued by the RBI. However, an Unregistered Type I NBFC is exempt from such requirement provided it passes an annual board resolution at the start of each financial year confirming it will neither access public funds nor maintain a customer interface during the relevant financial year;
3. Overseas Investment: Unregistered Type I NBFC intending to undertake overseas investment in the financial services sector will be treated at par with a Type I NBFC requiring a CoR. Unregistered Type I NBFCs are prohibited from undertaking overseas investment in the non-financial sector;
4. Group NBFCs: In case of multiple Unregistered Type I NBFCs in a ‘Group’, the asset size of all such Unregistered Type I NBFCs will be aggregated and if such aggregate asset size is INR 1,000 crore (approx. USD 104.77 million) or above, all such Unregistered Type I NBFCs in the Group are required to register as Type I NBFCs with the RBI;
5. Deregistration: A limited time deregistration window is available for existing NBFCs with a CoR which would otherwise be re-classified now as an Unregistered Type I NBFC; and
6. Indirect Public Funds: RBI has now clarified that ‘access to public funds’ includes indirect receipt of public funds e., funds received not directly but through associates and group entities which have access to public funds.