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What is the story about?
The Reserve Bank of India (RBI) has relaxed registration norms for non-banking financial companies (NBFCs), exempting those with no access to public funds and assets up to ₹1,000 crore from mandatory registration.
This effectively removes the “50:50 rule,” which previously restricted NBFCs from creating entities solely for investment purposes.
Under the old rule, NBFCs could not hold more than 50% of their assets in financial instruments such as mutual funds or shares, and financial income—including dividends and capital gains—could not exceed 50% of total income. Fixed deposits were exempt.
Industry experts say the change could improve both operational efficiency and financial inclusion.
“NBFCs are in a strong position to serve customers at the bottom of the pyramid because of their deep reach, strong local connect, and increasing use of technology,” said Shaji Varghese, CEO of Muthoot FinCorp.
He added that the regulatory relaxation will help bring more individuals and small businesses into the formal financial system. “Measures that liberalise branch expansion and enable responsible NBFCs to grow will strengthen financial inclusion and support inclusive economic growth for a Viksit Bharat,” he noted.
The move also comes alongside other RBI initiatives, such as maintaining the repo rate at 5.25% and increasing the collateral-free loan limit for MSMEs from ₹10 lakh to ₹20 lakh.
According to Abhimanyu Munjal, MD & CEO of Hero FinCorp, this will allow NBFCs to expand credit access more effectively in tier-2 and tier-3 markets.
He said, “Consumer protection measures, including compensation for victims of fraudulent transactions, will further strengthen trust and support the continued maturation of India’s digital lending ecosystem.”
Umesh Revankar, Executive Vice Chairman of Shriram Finance, pointed out that the new exemption reduces compliance burdens for smaller NBFCs. “It allows more management bandwidth to be devoted to credit delivery and risk management,” he said, adding that these measures, coupled with the RBI’s confidence in the sector’s capital, asset quality, and liquidity, reinforce the role of NBFCs in extending credit beyond metropolitan centres.
Regulatory relaxations, including eased branch expansion norms, have been welcomed as a way to improve efficiency without compromising systemic stability.
Rajesh Sharma, MD of Capri Global, said, “The RBI’s measures focused on customer protection, boosting MSME credit, and easing branch expansion norms enhance operational efficiency while supporting credit expansion.”
Echoing this view, Rajiv Sabharwal, MD and CEO of Tata Capital, said that policy stability combined with targeted regulatory measures “provides a supportive environment for NBFCs to sustain credit momentum and contribute to inclusive economic growth.”
For housing finance, the regulatory clarity and rate stability are also expected to strengthen borrower confidence. Rishi Anand, MD and CEO of Aadhar Housing Finance, said, “Rate stability supports borrower confidence and growth momentum. When combined with prior easing, it improves affordability and ensures steady credit flow across Bharat.”
This effectively removes the “50:50 rule,” which previously restricted NBFCs from creating entities solely for investment purposes.
Under the old rule, NBFCs could not hold more than 50% of their assets in financial instruments such as mutual funds or shares, and financial income—including dividends and capital gains—could not exceed 50% of total income. Fixed deposits were exempt.
There's
a rule by the RBI. If you have 50% of your assets are "financial assets" (including mutual funds, shares etc but FDs are ok) and "financial" income is more than 50% (dividends, capital gains, interest etc but not FD interest) Then you were supposed to register with the… pic.twitter.com/GnLBUvVYmq
— Deepak Shenoy (@deepakshenoy) February 6, 2026
Industry experts say the change could improve both operational efficiency and financial inclusion.
“NBFCs are in a strong position to serve customers at the bottom of the pyramid because of their deep reach, strong local connect, and increasing use of technology,” said Shaji Varghese, CEO of Muthoot FinCorp.
He added that the regulatory relaxation will help bring more individuals and small businesses into the formal financial system. “Measures that liberalise branch expansion and enable responsible NBFCs to grow will strengthen financial inclusion and support inclusive economic growth for a Viksit Bharat,” he noted.
The move also comes alongside other RBI initiatives, such as maintaining the repo rate at 5.25% and increasing the collateral-free loan limit for MSMEs from ₹10 lakh to ₹20 lakh.
According to Abhimanyu Munjal, MD & CEO of Hero FinCorp, this will allow NBFCs to expand credit access more effectively in tier-2 and tier-3 markets.
He said, “Consumer protection measures, including compensation for victims of fraudulent transactions, will further strengthen trust and support the continued maturation of India’s digital lending ecosystem.”
Umesh Revankar, Executive Vice Chairman of Shriram Finance, pointed out that the new exemption reduces compliance burdens for smaller NBFCs. “It allows more management bandwidth to be devoted to credit delivery and risk management,” he said, adding that these measures, coupled with the RBI’s confidence in the sector’s capital, asset quality, and liquidity, reinforce the role of NBFCs in extending credit beyond metropolitan centres.
Regulatory relaxations, including eased branch expansion norms, have been welcomed as a way to improve efficiency without compromising systemic stability.
Rajesh Sharma, MD of Capri Global, said, “The RBI’s measures focused on customer protection, boosting MSME credit, and easing branch expansion norms enhance operational efficiency while supporting credit expansion.”
Echoing this view, Rajiv Sabharwal, MD and CEO of Tata Capital, said that policy stability combined with targeted regulatory measures “provides a supportive environment for NBFCs to sustain credit momentum and contribute to inclusive economic growth.”
For housing finance, the regulatory clarity and rate stability are also expected to strengthen borrower confidence. Rishi Anand, MD and CEO of Aadhar Housing Finance, said, “Rate stability supports borrower confidence and growth momentum. When combined with prior easing, it improves affordability and ensures steady credit flow across Bharat.”
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