New Delhi, Apr 17 (KNN) The Reserve Bank of India (RBI) has issued the Non-Banking Financial Companies – Branch Authorisation (Amendment) Directions, 2026, introducing changes to norms governing branch expansion by non-banking financial companies (NBFCs).
Issued on Wednesday, the revised framework incorporates stakeholder feedback on draft guidelines released earlier this year.
The amendments modify provisions under the NBFC – Branch Authorisation Directions, 2025, and align related rules under the Acceptance of Public Deposits Directions, 2025 and Housing Finance Companies Directions, 2025.
Greater Operational Flexibility
Under the revised rules, NBFCs are generally allowed to open branches without prior approval from the RBI, unless specifically restricted. The move aims to improve ease of doing business while ensuring regulatory compliance.
The directions apply across multiple NBFC categories, including deposit-taking NBFCs, Investment and Credit Companies (NBFC-ICCs), Microfinance Institutions (NBFC-MFIs), Infrastructure Finance Companies (NBFC-IFCs), and Housing Finance Companies (HFCs).
Differentiated Norms for Deposit-Taking NBFCs
The RBI has introduced tiered norms based on financial strength.
NBFCs with net owned funds (NOF) of up to Rs 50 crore or with credit ratings below AA can open branches only within their home state. In contrast, NBFCs with NOF above Rs 50 crore and AA or higher ratings are permitted to expand operations across India.
Entities with stronger capital positions and higher ratings are thus granted greater operational flexibility.
Streamlined Procedures and Compliance
NBFCs are required to notify the RBI about branch expansion plans. If no objection is raised within 30 days, they may proceed. Applications are to be filed through the PRAVAAH portal.
For Housing Finance Companies, prior intimation to the National Housing Bank is mandatory before opening domestic branches, while overseas branch expansion remains restricted.
Additionally, NBFC-ICCs lending against gold collateral must seek RBI approval before opening more than 1,000 branches and ensure adequate storage and security arrangements.
Closure and Overseas Presence Rules
The directions mandate at least three months’ public notice for branch closures, along with regulatory intimation. Opening representative offices abroad requires prior RBI approval and is limited to liaison or research activities without fund transfers.
Regulatory Objective
The RBI said the amendments aim to balance operational flexibility with prudent oversight, ensuring that NBFC expansion does not compromise investor or depositor interests.
(KNN Bureau)
