The Reserve Bank of India has cancelled the registration of 150 Non-Banking Financial Companies (NBFCs), marking one of the largest regulatory enforcement actions against non-banking financial institutions. According to the latest RBI release, around 67 firms were registered in Delhi and 75 companies in West Bengal, particularly in Kolkata and nearby regions. The cancelled entities include several small and mid-sized finance and investment companies engaged in lending, leasing, investment and related financial activities, with firms also registered in states such as Telangana, Karnataka, Madhya Pradesh, Bihar and Haryana. As reported by The Economic Times, the above companies shall not transact the business of a Non-Banking Financial Institution, as defined in clause (a) of Section 45-I of the RBI Act, 1934.
The Reserve Bank of India has relaxed rules governing tie-ups between banks and non-bank entities for outward remittances, shifting responsibility to banks to ensure regulatory compliance by their partners. According to the latest RBI notification, Authorised Dealers are advised to comply with instructions while facilitating cross-border outward remittance of funds for non-trade current account transactions using third party entity in online mode. This move is expected to streamline cross-border payments for non-trade purposes such as overseas education, medical treatment, travel and family maintenance, while increasing transparency on foreign exchange rates and charges. The rules are applicable for tie-ups with Authorised Dealer category-1 (AD-1) banks, with all commercial banks and some small finance and co-operative banks having an AD-1 licence for cross-border transactions.
RBI's new exemption for smaller NBFCs is expected to significantly boost corporate participation in equity markets by reducing regulatory barriers. In April, the RBI announced an exemption from registration for NBFCs that do not avail of public funds, do not have a customer interface, and have assets of less than ₹1,000 crore. These entities will be classified as "Unregistered Type I NBFCs" with the norms coming into effect from July 1, 2026. Market participants and brokers noted that several corporates and entities that had remained wary of equity markets due to the risk of becoming "accidental NBFCs" may now participate more actively. As Uttam Bagri from BCB Brokerage explained, "This move will provide greater comfort to highly compliance-focused corporates and entities that were earlier hesitant to participate meaningfully in capital markets due to the risk of inadvertently triggering NBFC classification norms."
The Reserve Bank of India has accepted surrender requests from two core investment companies (CICs) - RR Holdings and Anjali Capfin - following their requests for deregistration. According to an official RBI statement, the cancellation of CoR for these entities has been done as it meets the "criteria prescribed for unregistered CIC that do not require registration." Additionally, HDFC Holdings' certificate was cancelled as it is no longer a legal entity post-merger, with HDFC Bank having merged its mortgage major parent HDFC Ltd with itself last year. Four other NBFCs - Guru Kirpa Finvest, Gajraj Securities And Services, Ashoka Viniyoga, and Purvanchal Investment And Trading Company - also surrendered their certificates due to exit from Non-Banking Financial Institution (NBFI) business.
Under the new framework, authorised dealers must provide comprehensive transaction information upfront to ensure transparency. As reported by The Economic Times, this includes the total estimated cost of the transaction, break-up of exchange rates (interbank rate and mark-up separately), service charges, other charges with detailed descriptions, and the exact amount to be credited to beneficiaries abroad. The central bank emphasized that this information must be provided upfront to eliminate any ambiguity in the remittance process, with RBI stating that "information like the total estimated cost of the transaction along with break-up of the exchange rate (interbank rate and mark-up separately), service charges, other charges with description and the exact amount to be credited to beneficiaries abroad must be included upfront, leaving no room for any ambiguity." Banks must also "prominently" display all required information to customers remitting funds through the website, online platform, software application, mobile application or any interface of the third party.
The revised guidelines introduce stricter operational safeguards to protect customer funds and maintain transaction integrity. According to The Economic Times, banks must ensure that customer funds never flow into third-party accounts in India and remain ringfenced from insolvency risks. The framework requires that transfers must move directly from the remitter's bank account to the beneficiary's account overseas, maintaining clear transaction flow throughout the process. As reported by The Economic Times, "the guidelines require banks to ensure that customer funds never flow into third-party accounts in India and remain ringfenced from insolvency risks. Transactions must originate from the remitter's bank account and terminate directly in the beneficiary's bank account." Banks will also need to display the details of all third-party tie-ups on their website, and their policy regarding storage of customer data.
Under the new rules, authorised dealers will maintain full responsibility for compliance with the Foreign Exchange Management Act (FEMA), customer due diligence, and grievance redressal, even when remittance services are offered through third-party platforms. As reported by The Economic Times, this regulatory approach shifts focus away from ex-ante approvals toward compliance, transparency, and consumer protection obligations at regulated banks facilitating the transactions. RBI stated that "under the new rules, authorised dealers will remain fully responsible for compliance with the Foreign Exchange Management Act (FEMA), customer due diligence and grievance redressal, even where remittance services are offered through third-party platforms." The framework requires authorised dealers to continue complying with existing foreign exchange rules while facilitating cross-border outward remittances.
RBI data on the expenditure under the liberalised remittances scheme (LRS) showed $26.4 billion was spent between April 2025 and February 2026, 2.3% lower than the corresponding period of the previous year. The largest category, spending on foreign travel, comprised $15.3 billion, 3.1% lower whereas spending on gifts sent abroad contracted 12.7%. However, investment by Indians in foreign debt and equity surged nearly 59% to $2.2 billion over the same period. Industry experts view this as a significant regulatory shift, with Taneia Bhardwaj from Wise noting that "Making disclosure requirements and transparency standards a baseline across the industry is a 'big deal'" and could benefit consumers who have been paying hidden costs. The framework formalises the regulatory position that had been in place since the 2023 Payment Aggregator-Cross Border (PA-CB) framework, bringing greater order to the sector while maintaining strong customer safeguards.
