Siddartha S. Karnani Highlights RBI’s Move to Clarify NBFC Framework
Siddartha S. Karnani has welcomed the Reserve Bank of India’s decision to reintroduce the explanation defining “indirect access to public funds” in its circular issued on July 1, describing it as a step towards ensuring greater regulatory clarity for Non-Banking Financial Companies (NBFCs).
Commenting on the development in a recent Mint article, Siddartha said, “The reintroduction of the explanation defining ‘indirect access to public funds’ in the 1 July circular indicates that the Reserve Bank of India intends to remove interpretational ambiguities and ensure consistent application of the upper layer NBFC framework.”
He noted that regulatory precision is critical in ensuring uniform implementation across the sector. According to him, ambiguity in regulatory language can result in inconsistent interpretations by regulated entities as well as market participants, making clear guidance essential for effective compliance.
At the same time, he observed that frequent amendments to the same regulatory framework may create operational challenges for NBFCs. “Multiple revisions to the same regulatory framework within a short period can create uncertainty for NBFCs, particularly those assessing their regulatory status and compliance obligations,” he added.
The RBI’s latest clarification is expected to play a significant role in improving consistency in the application of the Upper Layer NBFC framework while providing greater certainty to regulated entities navigating evolving compliance requirements.
Last Updated on 2 July, 2026
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