RBI Eases NBFC Branch Rules, Drops Routine Prior Approval

Branch reach for deposit-taking NBFCs now depends on capital strength, with higher-rated firms gaining nationwide access.

Overview

The RBI, which issued the final Branch Authorisation Directions on Wednesday, removed the routine need for its prior approval before NBFCs open branches and made the change effective immediately.
Deposit-taking NBFCs with net owned funds of up to ₹50 crore or with a credit rating below AA may open new branches or appoint agents only within the state of their registered office.
Deposit-taking NBFCs that hold more than ₹50 crore in net owned funds and carry an AA or higher rating may expand anywhere in India.
NBFCs with more than ₹50 crore in capital but a rating below AA remain restricted to their home state under the calibrated guardrails.
The directions follow a public consultation that closed on February 27 and also align related 2025 rules to create a simpler, uniform framework for non-bank lenders.