The Reserve Bank of India (RBI) on Wednesday issued fresh guidelines governing branch authorisation for Non-Banking Financial Companies (NBFCs), introducing a structured framework aimed at strengthening regulatory oversight while enabling controlled expansion.
The directions, titled Reserve Bank of India (Non-Banking Financial Companies – Branch Authorisation) Directions, 2025, have come into immediate effect and apply to multiple NBFC categories, including deposit-taking NBFCs, Housing Finance Companies (HFCs), and Investment and Credit Companies (NBFC-ICCs).
The central bank stated: “In exercise of the powers conferred by Chapter IIIB of the Reserve Bank of India Act, 1934, and Sections 30A, 32 and 33 of the National Housing Bank Act, 1987, and all other provisions/laws enabling the Reserve Bank of India (‘RBI’) in this regard, RBI being satisfied that it is necessary and expedient in the public interest so to do, hereby issues the Directions”.
Under the new framework, clear eligibility conditions have been defined for opening branches. Deposit-taking NBFCs with net owned funds up to Rs 50 crore or those with lower credit ratings will be restricted to opening branches only within the state where their registered office is located. In contrast, NBFCs with net owned funds exceeding Rs 50 crore and a credit rating of AA or above will be permitted to expand operations nationwide.
The guidelines introduce a streamlined approval mechanism for expansion. NBFCs are required to notify the RBI before opening a branch, and if no objection is raised within 30 days, they may proceed. Applications must be submitted through the PRAVAAH portal.
For Housing Finance Companies, the rules mandate prior intimation to the National Housing Bank before opening branches within India, while explicitly prohibiting them from opening branches abroad.
Additional safeguards have been introduced for NBFC-ICCs engaged in lending against gold collateral. Such entities must obtain prior RBI approval before expanding beyond 1,000 branches and are required to ensure robust storage and security systems for pledged gold.
The directions also cover branch closures. NBFCs must provide at least three months’ public notice through newspapers and inform the RBI or the National Housing Bank before shutting down any branch.
Further, opening representative offices abroad will require prior RBI approval and will be limited strictly to liaison and research activities, with no fund outflows permitted.
The RBI clarified that these directions replace earlier guidelines on branch authorisation while maintaining continuity of actions taken under previous frameworks.
According to the central bank, the move is aimed at ensuring a structured and transparent system for branch expansion, improving financial discipline, and aligning NBFC growth with evolving regulatory expectations in the financial sector.
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