Mumbai, Sept. 3: The Reserve Bank of India (RBI) is likely to prune the number of categories for non-banking financial companies (NBFCs) in the current financial year.

At present, there are 11 categories of NBFCs. These include asset finance company (AFC), loan company (LC), investment company (IC), core investment company (CIC), NBFC-factor and infrastructure debt funds-NBFC.

Infrastructure finance company (IFC), NBFC-microfinance institution, non-operative financial holding company (NOFHC), NBFC-account aggregator and mortgage guarantee company (MGC) are the other categories.

The RBI is now looking to reduce these segments as it moves to an activity-based regulation from an entity-based one.

"Going forward, the Reserve Bank will rationalise the NBFCs into fewer categories," the central bank said while commenting on its agenda for 2017-18 in the annual report.

If the central bank goes ahead with the plan, it will be another major step after November 2014 when it had reviewed the entire regulatory framework for the sector in line with its goal of an activity-based supervision.

The RBI had then focussed on making the regulations simple and easy and integrating the norms with banks to a limited extent.

The NBFC sector in India has evolved since 1997 in terms of operations and products.

According to the RBI, the various categories were envisaged to promote specific sectors and asset classes, resulting in different sets of regulatory prescriptions. This led to NBFCs coming up in asset financing, infrastructure financing and microfinance lending.

Last year, the RBI introduced the NBFC account aggregator which enables individuals to view their accounts across financial institutions in a single format.

Though the RBI did not disclose to what extent the categories would be trimmed, its plan comes just days after deputy governor N.S. Vishwanathan said there was scope for harmonising the regulations for the sector.

The RBI deputy governor had pointed out that the different regulations for various categories of NBFCs created scope for arbitrage.