RBI cancels registration certificates of 135 NBFCs in fresh crackdown

Regulator pulls licences of 135 NBFCs

The Reserve Bank of India (RBI) has cancelled the registration certificates of 135 non-banking financial companies (NBFCs), marking one of the largest such actions in recent years. The move, announced on Wednesday, targets firms that failed to comply with regulatory requirements or were found to be non-operational.

Sources indicate the affected NBFCs had not met minimum net-owned fund criteria or had violated know-your-customer (KYC) norms. Some were also found to be engaged in unauthorised deposit-taking activities, which the central bank has been cracking down on.

Reasons behind the mass cancellation

The RBI has been tightening oversight of the shadow banking sector since the collapse of IL&FS in 2018. Thousands of NBFCs have lost their licences over the past few years as the regulator pushes for greater transparency and financial stability.

In many cases, the cancelled firms were found to have submitted false compliance reports or had stopped operations entirely. The central bank's database shows that as of March 2026, over 9,000 NBFCs remain registered, down from nearly 11,000 five years ago.

Impact on borrowers and investors

Customers who had taken loans from these 135 NBFCs must now repay the outstanding amounts directly to the original lenders or to designated recovery agents. The RBI has instructed the firms to not collect any fresh deposits or disburse new loans.

Existing depositors are advised to approach the company for repayment. If they face difficulties, they can file complaints with the RBI's consumer education and protection cell. The central bank has not disclosed the total value of deposits or loans held by these firms.

Industry watchers see more actions ahead

Banking analysts say the latest crackdown is part of a broader strategy to weed out weak players. The RBI had earlier issued a circular in 2025 mandating stricter reporting standards for all NBFCs with assets of over Rs 500 crore.

Smaller firms that fail to meet the new norms are likely to face similar action in the coming quarters. The central bank has also warned that it will not hesitate to cancel registrations of entities that repeatedly breach regulatory guidelines.

The list of 135 NBFCs includes companies based in Maharashtra, Gujarat, Delhi, and Tamil Nadu, among other states. The RBI has published the list on its website and directed the firms to surrender their certificates within 15 days.

Legal experts point out that the affected companies can appeal the RBI's decision before the Securities Appellate Tribunal (SAT) within 30 days. However, the regulator's track record shows that most such cancellations are upheld on review.

The action is expected to have a limited immediate impact on the broader financial system, as the cancelled firms collectively account for a small share of the NBFC sector's total assets. But for customers and small investors caught in the crossfire, the next few weeks could be stressful.

The RBI has said it will monitor the repayment process and take further steps if any irregularities emerge.