RBI Proposes to Remove Prior Approval for Opening NBFC Branches
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- Last Updated on 10 February, 2026
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Press Release: 2025-2026/2059, Dated 06.02.2026
The Reserve Bank of India (RBI) has notified the Draft Amendment Directions to the Non-Banking Financial Companies – Branch Authorisation Directions, 2025 and invited comments from regulated entities and stakeholders on the proposed changes.
1. Timeline for Submission of Comments
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Last date to submit comments – 27 February 2026
Stakeholders are encouraged to provide feedback to assist the RBI in finalising the amended framework.
2. Background and Review of Existing Framework
The draft amendments follow a review of the existing regulatory framework governing the opening and closure of branches by NBFCs.
The RBI has assessed the current approval-based mechanism in light of evolving supervisory practices and the maturity of the NBFC sector.
3. Key Proposal – Removal of Prior Approval/Notice Requirement
The draft directions propose to:
- Do away with the requirement of prior approval or prior notice to the RBI
- For opening branches in India by NBFCs
Under the proposed framework, NBFCs would no longer be required to seek regulatory permission or intimate the RBI in advance for opening domestic branches.
4. Objective of the Proposed Amendments
The key objectives of the draft amendments are to:
- Reduce regulatory friction and procedural delays
- Enhance operational flexibility for NBFCs
- Align branch authorisation norms with the evolving regulatory and supervisory environment
- Support ease of doing business while retaining overall regulatory oversight
5. Regulatory Intent
The proposal reflects the RBI’s intent to move towards:
- A principles-based regulatory approach
- Greater reliance on post-facto supervision and disclosures, rather than ex-ante approvals
6. Key Takeaway
If finalised, the amendments will:
- Simplify the branch expansion process for NBFCs
- Remove the requirement of prior approval or notice for opening branches in India
- Mark a significant shift towards a more facilitative regulatory regime
Click Here To Read The Full Press Release
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