On Wednesday, the Reserve Bank of India (RBI) announced new final guidelines that exempt non-banking financial companies (NBFCs) with an asset size of less than ₹1,000 crore (approximately $120 million USD) from registration requirements, provided they do not utilize public funds or have a customer interface. These companies will be classified as 'Unregistered Type I NBFCs.' They must operate under a long-term business model and comply with specific conditions, including obtaining a resolution from their boards and certification from statutory auditors. Existing NBFCs that qualify can apply for deregistration by December 31, 2026, marking a significant regulatory shift by introducing a structured exit route. The deregistration process will be facilitated through the RBI’s PRAVAAH portal. The new regulations will take effect from July 1, 2026. Furthermore, the RBI has emphasized that any indirect access to public funds will be treated as public funding, reinforcing the need for compliance. Auditors are now required to file exception reports directly with the RBI if any conditions are violated, enhancing regulatory oversight. Additionally, Unregistered Type I NBFCs planning to invest in financial services abroad must first secure registration and approval from the RBI.