XYZ Investments Pvt. Ltd. is a company incorporated under the Companies Act, 2013, engaged solely in acquiring and holding shares and debentures of…

Examination of Registration Requirement for XYZ Investments Pvt. Ltd. under RBI (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Amendment Directions, 2026: The Reserve Bank of India (Non-Banking Financial Companies – Registration, Exemptions and Framework for Scale Based Regulation) Amendment Directions, 2026 (hereinafter referred to as “Registration Amendment Directions 2026”), effective from July 01, 2026, introduced a three-category definitional framework for NBFCs, including a new category: Unregistered (Type I – Exempt) NBFCs . An NBFC is eligible for exemption from the requirement of registration under Sections 45-IA and 45-IC of the RBI Act, 1934, if it meets the following conditions: Non-deposit-taking NBFC. No public funds. No customer interface. Asset size below ₹1,000 crore. Operates on this basis as a conscious and long-term business model. Analysis of XYZ Investments Pvt. Ltd.'s Status: Let's assess XYZ Investments Pvt. Ltd. against these criteria: Nature of Business: Engaged solely in acquiring and holding shares and debentures of group companies as an investment activity. This aligns with the definition of an Investment Company, which is a type of NBFC. Public Deposits: Does not accept public deposits. (Condition met) Public Funds: Does not avail public funds and does not intend to avail public funds. (Condition met) Customer Interface: Has no customer interface and does not intend to have customer interface as part of its business model. (Condition met) Asset Size: Total asset size is ₹850 crore, which is below the ₹1,000 crore threshold. (Condition met) Based on the above, XYZ Investments Pvt. Ltd. satisfies all the conditions to be classified as an Unregistered (Type I – Exempt) NBFC under the Registration Amendment Directions, 2026. Requirement to continue holding a Certificate of Registration (CoR): No, XYZ Investments Pvt. Ltd. is not required to continue holding a Certificate of Registration under the RBI Act, 1934, in light of the Registration Amendment Directions, 2026, because it meets all the criteria for exemption as an Unregistered (Type I – Exempt) NBFC. Compliance Requirements and Exit Option: Although XYZ Investments Pvt. Ltd. is eligible for exemption, it currently holds a CoR obtained under the SBR Directions, 2023. Its CoR does not automatically cease to be effective merely because it now satisfies the conditions for exemption. The Registration Amendment Directions, 2026, provide an exit mechanism for existing NBFCs that become eligible for exemption. Therefore, XYZ Investments Pvt. Ltd. should consider the following: Compliance Requirements: Annual Board Resolution: The company must pass an annual Board resolution confirming that it will not avail public funds and will not have customer interface during the financial year. Prescribed Disclosure: Make the prescribed disclosure in the Notes to Accounts in its financial statements, indicating its status as an exempt NBFC. Adherence to Conditions: Continuously ensure that it satisfies all the conditions prescribed for an Unregistered (Type I – Exempt) NBFC (i.e., no public funds, no customer interface, asset size below ₹1,000 crore). Exit Option: If XYZ Investments Pvt. Ltd. wishes to exit the regulatory registration framework, it can apply to the RBI for deregistration/surrender of its CoR . The Registration Amendment Directions 2026 specify a timeline for this: such NBFCs can apply for deregistration by December 31, 2026 . This process is subject to the applicable conditions and RBI's approval. Conclusion: In summary, XYZ Investments Pvt. Ltd. is eligible to avail the exemption applicable to an Unregistered Type I NBFC. While it is not required to continue holding its CoR, its existing CoR does not automatically lapse. It must comply with ongoing disclosure and Board resolution requirements and can choose to apply for deregistration/surrender of its CoR by December 31, 2026, subject to RBI approval.