The Reserve Bank has permitted non-banking finance companies (NBFCs) to open branches without seeking prior approval from the central bank, unless specifically restricted and with certain conditions.
“The objective of these amended directions is to provide operational flexibility to non-banks for branch expansion to facilitate ease of doing business while ensuring necessary regulatory compliance,” the central bank said in a master direction on Wednesday.
Under the revised framework, non-banks will be allowed to expand their branches without prior RBI approval, marking a departure from the earlier approach where certain categories required prior regulatory nod.
The RBI has retained a calibrated approach for deposit-taking NBFCs based on their financial strength and credit profile.
According to the new directions, deposit-taking NBFCs with net owned funds of up to `50 crore or with a credit rating below AA can open branches or appoint agents only within the state where their registered office is located. Those with net owned funds of above `50 crore and a credit rating of AA or higher can open branches or appoint agents anywhere in the country.
Those with net owned funds exceeding Rs 50 crore but with a rating below AA will be restricted to opening branches within their home state.
The central bank said the revised norms will come into force with immediate effect.
The RBI has also modified provisions relating to core investment companies (CICs). Earlier, the RBI could advise a CIC to wind up its overseas representative office in case of non-compliance. The revised directions replace this with a mechanism to review or recall approvals granted for such offices, signalling a shift in the regulatory approach within the existing framework.