RBI Cancels Registration of 13 NBFCs: 5 Compliance Rules Every NBFC Must Follow to Protect Its License

The Reserve Bank of India (RBI) recently cancelled the Certificates of Registration of 13 non-banking financial companies (NBFCs) under powers conferred on it by Reserve Bank of India Act, 1934. This regulatory action taken by central bank highlights the importance of compliance with RBI guidelines for NBFCs to maintain their registration and continue operating in a lawful manner. 

In this blog, we shall provide our readers with the complete list of 13 NBFCs whose registrations were cancelled. Additionally, we shall explain 5 compliance rules that NBFCs should follow so as to protect their NBFC licenses.

List of 13 NBFCs Whose Licences Were Cancelled by RBI

The RBI, exercising its powers u/s 45-IA (6) of the Reserve Bank of India Act, 1934, cancelled the Certificates of Registration for the following companies:-

Due to RBI NBFC license cancellation, the aforementioned companies shall not engage in the business of a Non-Banking Financial Institution, as defined in clause (a) of Section 45-I of the RBI Act, 1934. 

5 Compliance Rules to Follow to Protect NBFC License

Below, we have provided the 5 NBFC compliance rules RBI that every non-banking financial company needs to comply with to maintain regulatory compliance, protect its Certificate of Registration, and avoid penalties or cancellation of registration.

1. Maintain the Net Owned Fund Requirement for NBFCs

One of the most important compliance rules for NBFCs is maintaining the minimum Net Owned Fund (NOF) prescribed by RBI for their respective categories. The NOF requirements tend to vary across different types of NBFCs. Therefore, each and every NBFC company must ensure that it meets NOF criteria applicable to it. 

The minimum NOF criteria for various types of NBFCs are given in table below:-

2. Comply with RBI’s Fair Practices Code for NBFCs

Each and every NBFC license holder is required to ensure adherence to RBI Fair Practices Code for NBFCs. Under this framework, the RBI prescribes strict ethical lending standards and transparency rules for all the NBFCs in country. It states that all communications to borrowers should be conducted in the vernacular language or in a language that the borrower understands. 

According to the Code, the loan application forms must include necessary information that affects borrower's interests to enable a meaningful comparison with terms and conditions offered by other NBFCs. This would allow borrowers to make informed decisions. Moreover, the loan application form should specify documents required to be submitted along with application. 

The RBI NBFC Fair Practices Code also requires NBFC companies to implement a system that provides acknowledgment for receipt of all loan applications. Ideally, the acknowledgment should indicate time frame within which loan applications will be processed. In terms of vehicle repossession financed by NBFCs, a repossession clause must be included in contract/loan agreement with borrower and this clause should be legally enforceable. 

As per NBFC-Micro Finance Institutions (Reserve Bank) Directions, 2011, recoveries should generally be made only at a central designated place. Field staff may conduct recoveries at borrower's residence or workplace only if borrower fails to appear at central designated location on two or more consecutive occasions. 

NBFC-MFIs must ensure that a Board-approved policy is established regarding Code of Conduct for field staff. Such a policy must include guidelines for recruitment, training and supervision. This Code should also specify minimum qualifications required for field staff and identify necessary training tools for effective interaction with customers. 

Training programs for field staff must focus on fostering appropriate behavior toward borrowers. Such programs must strictly prohibit use of any abusive or coercive debt collection or recovery practices.

3. Follow NBFC Corporate Governance Guidelines 2026

In 2026, the central bank issued certain updated and consolidated governance and compliance guidelines for NBFC companies. All NBFCs must strictly adhere to these guidelines. The RBI (Non-Banking Financial Companies - Compliance Function) Directions 2026 came into effect on 31 July 2026. These directions serve as a master framework that consolidates compliance instructions particularly for Middle Layer and Upper Layer NBFCs. 

This framework mandates appointment of an independent Chief Compliance Officer for a minimum tenure of three years. Also, this framework requires implementation of enterprise-wide technology solutions for compliance monitoring purposes. The RBI has also standardized rules pertaining fit & proper criteria, risk management, board composition and compensation for key managerial personnel.

Adhering to all the guidelines and rules is essential for NBFCs to avoid penalties. Failure to comply for an extended period could result in heavy penalties or even cancellation of NBFC certificate by RBI. So, it is crucial not to take any risks and ensure compliance at all times. 

4. Submit Mandatory RBI Returns and Regulatory Filings on Time

NBFCs in India must file different returns with the RBI within given deadlines. DNBS02 is a quarterly return that includes financial details, profit and loss, assets and liabilities of the NBFCs. It has to be filed within 21 days of quarter end and has replaced old annual forms NBS-8 and NBS-9. DNBS10 is an annual return for Statutory Auditor’s Certificate. This form must be filed within 5 working days of the auditor signing the audit report with December 31 as the final deadline. DNBS13 is a quarterly return for overseas investments and must be filed within 21 days of quarter end even if there is nothing to report (i.e., NIL return). 

Form DNBS14 is required for NBFC-P2P lending platforms only while forms DNBS11 and DNBS12 are required for Core Investment Companies. DNBS07 is a quarterly return for Asset Reconstruction Companies. FMR-1 is a fraud reporting return that must be filed by NBFCs via CIMS portal. This form needs to be filed within 14 days from the date the fraud is officially classified as per the 2026 guidelines. 

5. Comply with RBI Directions to Avoid Cancellation of NBFC Registration

Non-Banking Financial Companies must comply with all directions issued by Reserve Bank of India from time to time. This includes adhering to updated RBI (Non-Banking Financial Companies - Statutory Audit) Directions, 2026, which govern appointment of Statutory Central Auditors or Statutory Auditors. These directions came into effect immediately upon their issuance by the central bank on 31 July 2026.

Additionally, the RBI (Non-Banking Financial Companies - Governance) Amendment Directions, 2026, will come into force next year, i.e. on 1 January 2027. This framework will introduce several revisions to governance rules as part of Scale-Based Regulatory Framework. Notably, it will provide exemptions for Upper Layer NBFCs that are fully owned as well as controlled by government. 

The NBFCs should regularly keep an eye on regulatory updates notified by RBI, fulfill all the prescribed obligations and implement applicable amendments in a timely manner. Failure to adhere to with RBI regulations may result in penalties, supervisory restrictions or at times even cancellation of NBFC registration. Therefore, continuous compliance is essential for every NBFC.

Final Thoughts

Out of 13 NBFC licenses cancelled by the RBI u/s 45-IA(6) of the RBI Act, 1934, 11 belong to companies registered in West Bengal. This highlights how important it is for NBFCs to comply with RBI rules and regulations. NBFCs must maintain the prescribed Net Owned Fund, follow Fair Practices Code, submit regulatory returns on time and comply with all applicable RBI directions. Following these five compliance rules can help NBFCs to avoid regulatory penalties and protect their registration from getting cancelled due to non-compliance.

For assistance with complying with NBFC Corporate Governance Guidelines 2026, the RBI’s Fair Practices Code or other regulatory requirements applicable to NBFCs, get in touch with Registrationwala’s business compliance team!

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Frequently Asked Questions (FAQs)

Q1. How to protect NBFC license in India?

A. To protect the NBFC license, the NBFCs must ensure compliance with RBI fair practices code, maintain net owned fund criteria, submit returns with RBI within the prescribed due dates and follow all other legal and regulatory requirements.

Q2. Why RBI cancels NBFC registration?

A. There are many reasons for RBI NBFC license cancellation. Some of the most common NBFC certificate of registration cancellation reasons include failure to ensure RBI Fair Practices Code NBFC compliance, failure to maintain Net Owned Fund criteria for NBFCs and non-submission of statutory and regulatory returns to RBI among others.

Q3. What is the voluntary surrender of NBFC license process?

A. To surrender the NBFC license voluntarily, the NBFC must pass a formal resolution approving the voluntary surrender. After that, it must settle all its liabilities and obligations. Then, the NBFC must file NBFC license cancellation application via RBI PRAVAAH portal. Once RBI receives the application, it’ll verify whether all the obligations are cleared. After successful verification, it’ll cancel the NBFC license of the entity.

Q4. Which Act empowers RBI to cancel Certificate of Registration of NBFCs?

A. Section 45-IA(6) of the Reserve Bank of India Act 1934 empowers RBI to cancel Certificate of Registration of an NBFC.

Author: Dushyant Sharma

Hey there, I'm Dushyant Sharma. With the extensive knowledge I've gained in past 8 years, I have been creating content on various subjects such as banking, insurance, finance and all the important registration and licensing processes for various companies. I'm here to help everyone with my expertise in these areas through my articles.