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The Master Direction – Exemptions from the provisions of RBI Act, 1934 (updated as on April 01, 2022) outlines specific exemptions granted to certain non-banking financial entities from select provisions of the RBI Act. These exemptions aim to streamline regulatory requirements for entities like payment system operators, merchant bankers, housing finance institutions, and others, based on their operational nature and risk profiles.

For instance, non-banking institutions authorized to operate payment systems and issue prepaid payment instruments under the Payment and Settlement Systems Act, 2007, are exempted from provisions of Chapter III B of the RBI Act, 1934, limited to money received for issuing such instruments. Similarly, entities like merchant banking companies, housing finance institutions, and certain government companies are exempt from sections like 45-IA, 45-IB, and 45-IC, provided they meet specific criteria related to their operations and financial activities.

These exemptions are designed to ensure that regulatory oversight is proportionate and tailored to the specific functions and risk exposures of different financial entities, thereby promoting efficiency without compromising financial stability.