Key Details of Regulatory Action
Authority & Power
Reserve Bank of India (RBI), under “Section 45-IA(6)” of the RBI Act, 1934.
Action
Cancellation of Certificate of Registration (CoR) for 21 Non-Banking Financial Companies (NBFCs).
Regulatory Consequence
Prohibited from transacting the business of a Non-Banking Financial Institution in India.
Cancellation Dates
Primarily on “September 05, 18, and 29, 2025”.
Root Cause Analysis (RCA) – General Grounds
The press release does not specify individual RCAs, but cancellations under Section 45-IA(6) are typically triggered by one or more of the following critical failures:
- Failure to Meet Net Owned Fund (NOF) Requirements:
The company didn’t maintain the statutory minimum NOF or Capital Adequacy Ratio (CAR), which is a core requirement for licensing.
- Cessation of Core Business / Voluntary Exit:
The NBFC ceased to conduct financial business or voluntarily applied to surrender its Certificate of Registration.
- Non-Compliance with RBI Directives:
Failure to comply with regulatory directions on corporate governance, risk management, KYC/AML, or repeated default in submitting mandatory returns.
- Detrimental Conduct:
The RBI found the NBFC’s management or financial conduct was, or was likely to be, prejudicial to the public interest or the interest of its depositors.
Detailed List of 21 Cancelled NBFCs
| S.No. | Company Name | Cancellation Date |
|---|
Preventive Controls for NBFCs
- Capital Management: Maintain Net Owned Funds (NOF) with a sufficient internal buffer well above the statutory minimum to avoid breaches.
- Compliance Function: Institute a dedicated, highly alert compliance team responsible for real-time tracking and mandatory implementation of all RBI directives.
- Audit Readiness: Ensure complete and accurate books of accounts are immediately available for inspection, treating compliance filings as non-negotiable deadlines.
- Governance Integrity: Conduct stringent internal checks to verify the ‘Fit and Proper’ status of all key personnel and obtain RBI approval for any change in ownership or control.
Lessons Learned for the Sector
- Zero Tolerance on Non-Compliance: The RBI is actively exercising its power to remove dormant, non-compliant, or small NBFCs that increase systemic risk.
- Proactive Exit Strategy: NBFCs must be realistic about their operational continuity and compliance capabilities; a voluntary surrender is preferable to a forced, public cancellation.
- Focus on Scale and Governance: The regulatory environment is hardening, rewarding well-governed, adequately capitalized entities and pressuring smaller, weaker players to consolidate or exit.
- Investor Confidence: While cancellations highlight non-compliance, they ultimately boost confidence by demonstrating the regulator’s commitment to ensuring a stable, clean financial system.