Current · Source: Reserve Bank of India · RBI/2026-2027/11 · issued 15 Apr 2026 · ~2 min read
Quick answerRBI has amended NBFC Branch Authorisation Directions 2025 to provide operational flexibility. Most NBFCs can now open branches without prior RBI approval, except deposit-taking NBFCs which have conditions based on net owned fund and credit rating.
The rule, in the simplest words
Most NBFCs (companies that lend money but are not banks) can now open new branches without asking RBI (the central bank) for permission first.
Deposit-taking NBFCs (companies that take money from people like a savings account) have stricter rules: if they have less than ₹50 crore of their own money or a credit rating (a score of how safe they are) below AA, they can only open branches in the same state as their main office.
Deposit-taking NBFCs with more than ₹50 crore of their own money AND a credit rating of AA or above can open branches anywhere in India.
Old rules about certain branch permissions (called subsections A2 and A3) are removed, so compliance teams should delete those from their manuals.
How it plays out — a real example
Priya, a compliance officer at a deposit-taking NBFC in Mumbai, checks her company's net owned fund (its own money) is ₹30 crore and its credit rating is A+. Because of the new rule, she knows she can only open new branches in Maharashtra, not in other states, and she updates the branch expansion plan accordingly.
What changed
The amendment replaces paragraph 3(1) to clarify applicability across all NBFC layers, including HFCs and CICs. Paragraph 5 now generally permits NBFCs to open branches without prior RBI approval unless specifically restricted. Paragraph 6 restricts deposit-taking NBFCs: those with NOF up to ₹50 crore or credit rating below AA can only open branches within their registered office state; those with NOF above ₹50 crore and AA rating or above can open anywhere in India. Subsections A2 and A3 (paragraphs 7-9) are deleted, and paragraphs 10 and 13 are updated to include/exclude CICs and HFCs appropriately.
What it means for you
This gives most NBFCs greater freedom to expand branches without seeking RBI approval each time, reducing compliance burden. For deposit-taking NBFCs, the rules remain tighter, linking branch expansion to financial strength (NOF) and credit rating, ensuring depositor protection. Lenders should review their NOF and credit rating to understand their branch expansion eligibility.
What you must do
Review your NBFC's classification (deposit-taking or not) and check NOF and credit rating against the new thresholds.
Update internal branch expansion policies to align with the new general permission for non-deposit-taking NBFCs.
For deposit-taking NBFCs, ensure branch expansion plans comply with state-wise restrictions based on NOF and rating.
Delete any obsolete procedures related to the removed subsections A2 and A3 from your compliance manuals.
Who it affects
All NBFCs registered with RBI (NBFC-D, NBFC-ICC, NBFC-Factor, NBFC-MFI, NBFC-IFC, IDF-NBFC, HFCs, CICs), Deposit-taking NBFCs and deposit-taking HFCs, Compliance and branch expansion teams of NBFCs
❓ Common questions
Do all NBFCs now have automatic permission to open branches anywhere?
No. Only non-deposit-taking NBFCs generally have automatic permission. Deposit-taking NBFCs must meet conditions: if NOF is up to ₹50 crore or credit rating below AA, they can only open branches within their registered office state; if NOF exceeds ₹50 crore and rating is AA or above, they can open anywhere in India.
What happens to the earlier branch authorisation procedures for NBFCs?
The earlier subsections A2 and A3 (paragraphs 7-9) have been deleted, simplifying the process. Most NBFCs no longer need prior RBI approval for branch openings, unless specifically restricted.
Are Housing Finance Companies (HFCs) and Core Investment Companies (CICs) covered under this amendment?
Yes. HFCs are explicitly included in the applicability list. CICs are covered for paragraphs 10, 13-15, and paragraph 10 now excludes CICs and HFCs from certain provisions, while paragraph 13 includes them.
📜 Read the original circular — full text as issued by RBI
RBI/2026-2027/11
DOR.RAUG.REC.No.3/23-27-013/2026-27
April 15, 2026
Reserve Bank of India (Non-Banking Financial Companies – Branch Authorisation) Amendment Directions, 2026
The Reserve Bank had issued the Reserve Bank of India (Non-Banking Financial Companies – Branch Authorisation) Directions, 2025 (hereafter referred as the 'Directions'), on November 28, 2025. It has been decided to amend these Directions to provide operational flexibility to the NBFCs for branch expansion while ensuring necessary compliance.
2. Accordingly, in exercise of the powers conferred by Chapter IIIB of the Reserve Bank of India Act, 1934, and Sections 30A of the National Housing Bank Act, 1987 and all other provisions / laws enabling the Reserve Bank of India ('RBI') in this regard, the Reserve Bank having considered it necessary in the public interest, and being satisfied that, for the purpose of enabling the Reserve Bank to regulate the financial system to the advantage of the country so to do, and to prevent the affairs of any NBFC from being conducted in a manner detrimental to the interest of investors and depositors or in any manner prejudicial to the interest of such NBFC, hereby, issues to every NBFC the following Amendment Directions.
3. These Directions shall be called the Reserve Bank of India (Non-Banking Financial Companies – Branch Authorisation) Amendment Directions, 2026.
4. These Amendment Directions shall come into force with immediate effect.
5. The Directions are amended as provided below:
i) Paragraph 3 (1) , shall be substituted by the following:
These Directions shall be applicable to the following Non-Banking Financial Companies (hereinafter collectively referred to as 'NBFCs' and individually as an 'NBFC'), for all layers:
(i) The provisions contained in paragraphs 5, 10 to 11 and 13 to 15 shall be applicable to the following categories of NBFCs:
(a) NBFC-D registered with the RBI under the provisions of the RBI Act, 1934;
(b) NBFC-ICC registered with the RBI under the provisions of the RBI Act, 1934;
(c) NBFC-Factor registered with the RBI under the provisions of the Factoring Regulation Act, 2011;
(d) NBFC-MFI registered with the RBI under the provisions of the RBI Act, 1934;
(e) NBFC-IFC registered with the RBI under the provisions of the RBI Act, 1934;
(f) IDF-NBFC registered with the RBI under the provisions of the RBI Act, 1934;
(g) HFCs registered with RBI under the provisions of the NHB Act, 1987;
(ii) The provisions contained in paragraphs 6 and 12 shall be applicable to deposit taking NBFCs registered with the RBI under the provisions of the RBI Act, 1934 and deposit taking HFCs registered with RBI under the provisions of the NHB Act, 1987;
(iii) The provisions contained in paragraphs 10,13 to 15 shall be applicable to CIC registered with the RBI under the provisions of the RBI Act, 1934;
ii) Heading of subsection A1 , shall be renamed as "Opening of branch in India".
iii) Paragraph 5 , shall be substituted by the following:
"An NBFC is generally permitted to open branches without having the need to obtain prior approval from RBI, unless otherwise specifically restricted."
iv) Paragraph 6 , shall be substituted by the following:
"A deposit-taking NBFC registered with RBI and otherwise entitled to accept public deposits as per the Reserve Bank of India (Non-Banking Financial Companies – Acceptance of Public Deposits) Directions, 2025 , shall be permitted as under:
(i) If its NOF is up to ₹ 50 crore or has a credit rating below AA then it may open a branch or appoint agents within the State where its registered office is situated; and
(ii) If its NOF is more than ₹ 50 crore and its credit rating is AA or above, then it may open a branch or appoint agents anywhere in India.
Explanation: An NBFC with NOF greater than ₹ 50 crore and credit rating below AA, shall be eligible to open branches only within the state where its registered office is situated."
v) Subsections A2 and A3 including paragraphs 7, 8 and 9 shall stand deleted.
vi) In paragraph 10 , the words "(except CIC & HFC)" shall be inserted after the words "However, the NBFC".
vii) In paragraph 13 , the words "(including CICs and HFCs)" shall stand deleted.
viii) In paragraph 15 , the words "RBI may advise the CIC to wind up the establishment" shall be substituted with the words "the approvals given for the purpose shall be reviewed / recalled".
Yours faithfully,
(Manoranjan Padhy)
Chief General Manager
Reproduced for reference with acknowledgment — Source: Reserve Bank of India · RBI/2026-2027/11 · issued 15 Apr 2026. The plain-English explanation above is BankPulse’s own independent summary.
Update internal branch expansion policies to align with the new general permission for non-deposit-taking NBFCs.
For deposit-taking NBFCs, ensure branch expansion plans comply with state-wise restrictions based on NOF and rating.
📜 Compliance
Review your NBFC's classification (deposit-taking or not) and check NOF and credit rating against the new thresholds.
Delete any obsolete procedures related to the removed subsections A2 and A3 from your compliance manuals.
Grouped from the action items above — a single circular may involve more than one team.
Worked example & action-note template
Example: if you are a Compliance officer at a bank this circular applies to (All NBFCs registered with RBI (NBFC-D, NBFC-ICC, NBFC-Factor, NBFC-MFI, NBFC-IFC, IDF-NBFC, HFCs, CICs), Deposit-taking NBFCs and deposit-taking HFCs, Compliance and branch expansion teams of NBFCs), your first concrete step on “NBFC Branch Authorisation Amendment 2026: Operational Flexibility” is: “Review your NBFC's classification (deposit-taking or not) and check NOF and credit rating against the new thresholds.” (RBI issued this 15 Apr 2026).
Action required: Review your NBFC's classification (deposit-taking or not) and check NOF and credit rating against the new thresholds.
Action required: Update internal branch expansion policies to align with the new general permission for non-deposit-taking NBFCs.
Action required: For deposit-taking NBFCs, ensure branch expansion plans comply with state-wise restrictions based on NOF and rating.
Action required: Delete any obsolete procedures related to the removed subsections A2 and A3 from your compliance manuals.
Owner: ____________ Target date: ____________
Board/committee approval needed? Y / N
Evidence filed in compliance register on: ____________
Built only from this circular’s own published fields — not legal advice; always confirm against the official RBI source.
💬 Banker Discussion
Discuss this circular with fellow bankers — reply, upvote what helps, report what doesn’t belong. Be professional; no client data. Views are the commenter’s own, not BankPulse’s.
BankPulse Compliance Evidence Pack — generated 02 Aug 2026 · status cross-checked against RBI’s official withdrawal register (refreshed weekly). Official RBI source: https://www.rbi.org.in/Scripts/NotificationUser.aspx?Id=13370&Mode=0 — Plain-English summary by BankPulse (bankpulse.ai), reviewed by our expert reviewer, CA Amit Jain. Independent platform, not affiliated with the Reserve Bank of India; is our own plain-English paraphrase, not RBI’s original wording.
Help us keep this accurate
Found an inaccuracy or have an improvement? Tell us. Every report is reviewed by our team before any change is made — nothing goes live unverified.
Public beta — plain-English informational summaries. Always verify against the official RBI source (circular number cited on every page) before making compliance, credit, treasury, audit, or operational decisions. · Join our WhatsApp channel ↗
BANKPULSE · FREE DAILY BRIEF
Get RBI updates for your role
Every important RBI update, decoded in plain English — for your career, exams & financial awareness.
We collect only your email, name and role, used solely to send your brief — never sold or shared. Withdraw anytime via the unsubscribe link in any email. Independent platform, not affiliated with the RBI. Information, not legal advice.
REPORT AN ERROR · BETA
Spotted an error? Earn 500 BankPulse Credits
Help us stay accurate. If your correction is verified true and approved by our founder, you earn 500 BankPulse Credits — redeemable when the platform monetises.
Reviewed by a human before any credit is awarded. We never change the site from crowd input without verification.
WANT A NEW FEATURE · BETA
What would make BankPulse more useful for you?
Tell us what to build next — a tool, a data view, a role page, anything. We read every suggestion.
Thank you — your ideas directly shape what we build.