The Reserve Bank of India has moved from periodic enforcement to relentless, rolling crackdowns on Non-Banking Financial Companies. The numbers from 2025–2026 tell an unambiguous story: the RBI cancelled the registration of 150 NBFCs between April 6 and April 21, 2026 alone — making it the single largest enforcement sweep in the sector’s history. If your company holds an NBFC Registration, the pace of regulatory action in 2026 leaves no room for complacency.
Key Numbers at a Glance (Updated May 2026)
| Metric | Figure |
|---|---|
| NBFC licenses cancelled in April 2026 | 150 |
| NBFC licenses cancelled in Dec 2025 | 35 |
| NBFCs actioned between 2023–2025 | 60+ |
| NBFCs voluntarily surrendering CoR (April 2026) | 7 |
| Total penalties in FY 2024–25 | ₹54.78 Crore |
The April 2026 Mass Cancellation: Biggest Ever
The Reserve Bank of India cancelled the Certificate of Registration of 150 Non-Banking Financial Companies in May 2026, barring them from conducting any NBFC business. The action was taken under Section 45-IA(6) of the Reserve Bank of India Act, 1934.
The cancellations were driven by failure to meet crucial regulatory and financial norms, including non-compliance with Net Owned Fund requirements, inactivity in NBFC operations, and failure to adhere to RBI’s prudential guidelines. Some companies were also reclassified as Core Investment Companies that do not require registration.
Geographically, the crackdown was concentrated but not isolated. Of the 150 NBFCs whose licences were cancelled, 75 were registered in West Bengal and 67 in Delhi. The list also included firms from Telangana, Bihar, Madhya Pradesh, Tamil Nadu and Haryana.
Alongside the 150 forced cancellations, 7 NBFCs voluntarily submitted their Certificates of Registration. The RBI also restored the license of Krishna Capfin, demonstrating a balanced, firm, and legally sound approach — cancelling non-compliant entities while respecting judicial restoration for those that meet requirements.
The December 2025 Wave: 35 Licenses Cancelled
Before the April 2026 sweep, the RBI had already signalled its intent. Between December 9 and December 31, 2025, the Reserve Bank of India revoked the Certificates of Registration of 35 Non-Banking Financial Companies, alongside 16 additional NBFCs that voluntarily surrendered their registrations — affecting 51 entities in a single regulatory sweep.
Cancelled NBFCs remain subject to RBI enforcement actions, including potential penalties, if violations of the regulatory framework are detected even after cancellation. The revocation does not extinguish past liabilities or regulatory exposure.
January 2026: 7 More Licenses Gone
The enforcement cadence didn’t pause between the December 2025 and April 2026 sweeps. The RBI cancelled the Certificate of Registration of seven additional NBFCs in January 2026, under Section 45-IA(6) of the RBI Act, 1934, effectively barring these companies from conducting any NBFC-related business in India.
Notable Penalty Cases: Recent Fines
Manappuram Finance April 2026:
The Reserve Bank imposed a penalty of ₹20 lakh on Manappuram Finance for non-compliance with certain provisions of NBFC norms. The Thrissur-based gold loan company, which is the second-largest pure-play gold lender by AUM, was penalised based on deficiencies in regulatory compliance.
IIFL Finance February 2026:
IIFL Finance was fined ₹5.3 lakh for failing to classify certain restructured accounts as non-performing assets in a timely manner.
Four NBFCs ₹76.6 Lakh Combined (2025):
The RBI imposed monetary penalties totalling ₹76.6 lakh on four NBFCs for non-compliance with regulatory norms. Violations included lapses in governance, reporting requirements, fair lending practices, capital adequacy, and fraud risk management. Visionary Financepeer was specifically fined ₹16.6 lakh for non-adherence to fair lending practices and compliance failures.
Three NBFCs September 2024 (Ongoing Impact):
Hewlett Packard Financial Services was fined ₹10.40 lakh for KYC non-compliance. SMFG India Credit Company (formerly Fullerton India) was penalised ₹23.10 lakh for violating IT and cybersecurity guidelines — specifically failing to monitor outsourced vendors and retain critical audit logs. Muthoot Vehicle and Asset Finance faced ₹7.90 lakh in penalties for omitting its Liquidity Coverage Ratio from its website and failing to provide loan sanction letters in the vernacular language for vehicle loan borrowers.
Why RBI Is Acting: The Root Causes
The era of treating an NBFC license as a passive asset, a shell corporation, or a regulatory arbitrage tool is decisively over. The RBI is aggressively weeding out undercapitalized, dormant, and non-compliant entities to build a robust, resilient shadow banking sector.
The most common triggers for enforcement action in 2025–2026:
Net Owned Fund (NOF) Failure: Many cancelled NBFCs simply could not sustain the ₹10 crore minimum NOF requirement under RBI’s updated framework.
Operational Dormancy: Shell companies holding licenses without active loan books are prime targets for cancellation under Section 45-IA(6).
KYC & AML Lapses: Weak customer verification, failure to file Suspicious Transaction Reports, and inadequate FIU-IND compliance remain the most penalised violations.
IT & Cybersecurity Gaps: Failure to monitor outsourced vendors, missing IS audits, and inadequate audit log retention, as seen in the SMFG case.
Fair Lending Violations: Excessive interest rates, coercive recovery practices, and non-disclosure of loan terms continue drawing both fines and business bans.
Governance Failures: Absence of a Chief Compliance Officer, weak board oversight, and poor compliance frameworks trigger intensified supervisory scrutiny.
February 2026: RBI’s New Mis-Selling Framework
Beyond penalties, the RBI moved in February 2026 to reshape how NBFCs and banks approach customers entirely. The RBI issued a draft framework to address mis-selling, defining it to include selling products unsuitable to a customer’s risk profile, providing misleading or incomplete information, selling without explicit consent, and forcing customers into bundled products. Once implemented, financial institutions will be required to align product offerings with a customer’s income, risk appetite, and financial objectives, failing which they may face regulatory action.
What NBFC Registration Holders Must Do Right Now
Under Section 45-IA of the RBI Act, 1934, it is a criminal offence to carry on NBFC business without a Certificate of Registration from RBI. Penalties can include imprisonment of up to five years and heavy fines. And once cancelled, recovery is extremely difficult — once an NBFC’s CoR is cancelled, the entity cannot resume such activities through voluntary restoration of registration and must pursue a complex appellate process.
Every NBFC must operate from this compliance baseline in 2026:
- Audit your Net Owned Fund immediately — the ₹10 crore minimum is non-negotiable and the most common cancellation trigger in 2026.
- Maintain an active, documented loan book — dormant entities holding licenses are being systematically eliminated.
- Strengthen KYC/AML processes end-to-end, including FIU-IND registration and timely STR submissions.
- Conduct an IT and cybersecurity audit — vendor monitoring, IS audits, and audit log retention are now actively inspected.
- Appoint a Chief Compliance Officer if classified under Middle or Upper Layer; document your compliance framework formally.
- Review all lending practices against RBI’s fair practices guidelines — interest rate structures, recovery processes, and borrower communications.
- Prepare for the incoming mis-selling framework by mapping all products to customer risk profiles.
- Seek prior RBI approval for any change in management, ownership, or operational structure.
