RBI Cancels Certificate of Registration of 35 NBFCs for Regulatory Non-Compliance

In January 2026, the Reserve Bank of India (RBI) cancelled the Certificate of Registration (CoR) of 35 Non-Banking Financial Companies (NBFCs) for failing to comply with regulatory requirements. These cancellations became effective from December 9 to 31, 2025. Additionally, 16 other NBFCs voluntarily surrendered their CoR to the RBI, bringing the total number of cancelled registrations to 51 NBFCs. This significant regulatory action demonstrates RBI’s commitment to maintaining financial system integrity and enforcing strict compliance standards across the non-banking financial sector.

Why This Action Matters?

This regulatory crackdown addresses critical compliance failures in the non-banking financial sector. The action serves multiple strategic purposes:

• Financial System Stability – Removes non-compliant entities that pose systemic risks
• Consumer Protection – Prevents unlicensed entities from operating
• Regulatory Enforcement – Demonstrates RBI’s resolve in maintaining standards
• Market Integrity – Eliminates fraudulent or unstable players
• Investor Confidence – Ensures only legitimate NBFCs operate in the market

The cancellation reflects RBI’s zero-tolerance approach toward regulatory violations and non-compliance. By removing these entities from the financial ecosystem, the central bank protects depositors, investors, and the overall integrity of India’s financial system.

Authority and Legal Framework

Regulatory Authority:

• RBI exercises powers under Section 45-IA(6) of the RBI Act, 1934
• Authority to cancel CoR for non-compliance with registration requirements
• Applies to all registered NBFCs in India
• Part of RBI’s regulatory supervision framework

Registration Requirements:

• All NBFCs must obtain CoR before commencing business
• Governed under Section 45-IA of the RBI Act, 1934
• Minimum Net Owned Funds (NOF) requirement: Rs 10 crore
• NOF may be higher for specific NBFC categories
• Regular compliance monitoring by RBI

Restrictions After Cancellation:

• Cancelled NBFCs barred from operating as NBFCs/NBFIs
• Cannot conduct NBFC business as defined in Section 45-I(a)
• Subject to RBI enforcement and penalty provisions
• Registration cannot be voluntarily restored

Geographical Distribution of Cancelled NBFCs

Concentration in Delhi/NCR (Majority):

Key Cancelled NBFCs in Delhi/NCR:

• AG Securities – Delhi
• ALB Leasing & Finance – NCR
• ATM Credit & Investments – Delhi/NCR
• Corporate Capital Services India – NCR region
• Decisive Finance – Delhi
• Divine Investments – Delhi
• Liberty Sales – NCR
• Pearls Hire Purchase Corporation – Delhi/NCR
• Quasar India Fincap – NCR
• Sunlife Securities – Delhi
• Sunrise Manufacturing Co – NCR
• Swito Finance & Estates – Delhi
• Triveni Vinimay – Delhi/NCR

The RBI noted that cancelled NBFCs are predominantly concentrated in Delhi and the National Capital Region, indicating that this region had significant regulatory compliance issues.

Outside NCR (Limited):

• Shivom Investment & Consultancy Ltd – Mumbai, Maharashtra
• Satya Prakash Capital Investment Ltd – Jabalpur, Madhya Pradesh

Voluntary Surrenders by 16 NBFCs

Categories of Voluntary Surrenders:

Business Exit Category (8 Companies):

• Dharmesh Stock Broking Pvt. Limited – Mumbai, Maharashtra
• Millennium Holdings Pvt. Limited – Kolkata, West Bengal
• Celestial Consultants Pvt. Limited – Kolkata, WB
• Damayanti Finance & Properties Pvt. Limited – Chennai, Tamil Nadu
• Liquid Paper Finserve Pvt. Ltd. – Delhi
• Peerless Financial Services Ltd. – Kolkata, WB
• Park Avenue Engineering Ltd. – Mumbai, Maharashtra
• Arvind Overseas Project Services Pvt. Ltd. – Delhi

Core Investment Company (CIC) Criteria (3 Companies):

These firms reclassified as CICs rather than NBFCs:

• Shyam Basic Infrastructure Projects Pvt. Ltd. – Jaipur, Rajasthan
• Shruti Finsec Pvt. Ltd. – Kanpur, Uttar Pradesh
• Sita Investment Company Ltd. – Raipur, Chhattisgarh

Corporate Restructuring (5 Companies):

These ceased operations due to amalgamation, merger, dissolution, or voluntary strike-off:

• Edelweiss Retail Finance Ltd. – Mumbai, Maharashtra
• Super Commodities Pvt. Ltd. – Kolkata, WB
• Silfix Tradelink Pvt. Ltd. – Kolkata, WB
• Sakthi Traders Pvt. Ltd. – Kolkata, WB
• Yaduka Financial Services Ltd. – Kolkata, WB

Understanding NBFCs

Definition and Characteristics:

Non-Banking Financial Companies are financial institutions registered under the Companies Act, 1956 or 2013. These entities offer loans, advances, and acquire stocks, equities, and government-issued debts. However, they operate under significant regulatory restrictions compared to traditional banks.

Key Restrictions on NBFCs:

• No Demand Deposits – Cannot accept deposits on demand like banks
• No Payment System Access – Not covered under RBI’s Payment Settlement System (PSS)
• No Deposit Insurance – Depositors not entitled to DICGC insurance coverage
• Limited Products – Restricted from offering certain banking services
• Regulatory Oversight – Subject to stricter RBI monitoring

NBFC Categories:

Category	Purpose
Investment & Credit Company (ICC)	Investment and lending services
Housing Finance Company (HFC)	Specialized housing loans
Infrastructure Finance Company (IFC)	Infrastructure project financing
Core Investment Company (CIC)	Investment activities in other companies
Infrastructure Debt Fund (IDF-NBFC)	Long-term infrastructure debt

By Liability Type:

• Deposit-taking NBFCs – Accept public deposits (more regulated)
• Non-Deposit-taking NBFCs – Do not accept deposits (less regulated)

Exam Important Points

Must Remember Facts:

• RBI cancelled CoR of 35 NBFCs in January 2026
• Cancellations effective from December 9-31, 2025
• Authority: Section 45-IA(6) of RBI Act, 1934
• Additionally 16 NBFCs voluntarily surrendered CoR
• Total cancelled: 51 NBFCs
• Predominantly concentrated in Delhi/NCR

Key Regulatory Framework:

• NBFC registration governed under Section 45-IA
• Minimum NOF requirement: Rs 10 crore
• RBI has absolute authority to cancel CoR
• Cancelled NBFCs barred from NBFC/NBFI business
• Non-compliance trigger for cancellation