Comprehensive guide to NBFC registration in India — understanding RBI eligibility criteria, capital requirements, application process, types of NBFCs, and ongoing compliance for non-banking financial companies.
What Is an NBFC?
A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 2013, that is engaged in the business of loans and advances, acquisition of shares, stocks, bonds, debentures, securities, leasing, hire-purchase, insurance, or chit business. NBFCs are regulated by the Reserve Bank of India (RBI) under Chapter IIIB of the RBI Act, 1934.
Unlike banks, NBFCs cannot accept demand deposits (like savings or current accounts), do not form part of the payment and settlement system, and cannot issue cheques drawn on themselves. However, they play a crucial role in India's financial ecosystem by extending credit to underserved segments — MSMEs, rural borrowers, and individuals who may not have access to traditional banking.
Types of NBFCs
| Type | Full Name | Primary Activity |
|---|---|---|
| NBFC-ICC | Investment and Credit Company | Lending, investment in securities (most common type) |
| NBFC-MFI | Micro Finance Institution | Micro-lending to economically weaker sections |
| NBFC-Factor | Factoring Company | Factoring (buying receivables/invoices) |
| NBFC-P2P | Peer-to-Peer Lending Platform | Facilitating P2P lending through online platform |
| NBFC-AA | Account Aggregator | Consolidating financial data from multiple sources |
| HFC | Housing Finance Company | Housing loans (regulated by NHB, now under RBI) |
| IFC | Infrastructure Finance Company | Long-term infrastructure project financing |
Eligibility for NBFC Registration
| Criteria | Requirement |
|---|---|
| Company Type | Must be a company registered under the Companies Act, 2013 |
| Minimum Net Owned Fund (NOF) | ₹10 crore (for NBFC-ICC, NBFC-MFI; ₹2 crore for NBFC-P2P and NBFC-AA) |
| Business Activity | Financial activities must comprise > 50% of total assets and gross income |
| Directors | Must have directors with experience in finance, banking, or related fields |
| CIBIL/Track Record | Promoters and directors must have clean credit history (no defaults/wilful defaults) |
| Compliance | Must not be blacklisted or debarred by any regulatory authority |
Step-by-Step NBFC Registration Process
Step 1: Incorporate a Company
Incorporate a Public Limited Company or Private Limited Company with the main object clause specifying financial activities. The paid-up capital must meet the minimum NOF requirement.
Step 2: Build Up Net Owned Funds
Bring in equity capital to meet the minimum NOF requirement (₹10 crore for most NBFCs). The NOF must be in the form of equity share capital — borrowed funds do not count.
Step 3: Prepare the Business Plan
Prepare a comprehensive 5-year business plan covering target market, product offerings, revenue projections, risk management framework, and capital adequacy plan. RBI evaluates the viability and prudence of the business plan.
Step 4: Apply to RBI Online
Submit the application on the RBI COSMOS portal (cosmos.rbi.org.in). Upload the following:
- Certified copies of company incorporation documents (COI, MOA, AOA)
- Audited financial statements for the last 3 years (or since incorporation)
- Board resolution authorising the application
- Details of directors — KYC, experience, net worth certificates
- 5-year business plan with financial projections
- Anti-money laundering and KYC policy
- Fair Practices Code
- IT systems and infrastructure details
Step 5: RBI Due Diligence
RBI conducts thorough due diligence including background checks on promoters and directors, evaluation of the business plan, and assessment of capital adequacy.
Step 6: Certificate of Registration (CoR)
If the RBI is satisfied, it issues a Certificate of Registration (CoR) authorising the company to commence NBFC business. The process typically takes 6-12 months from the date of application.
Key Compliance Requirements
- Capital Adequacy: Minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 15%
- Asset Classification and Provisioning: NPAs must be classified and provisioned as per RBI norms
- Fair Practices Code: Mandatory code for transparent and fair lending practices
- KYC and AML: Full compliance with Know Your Customer and Anti-Money Laundering guidelines
- Annual Returns: File NBS-7, NBS-ALM, and other returns with RBI
- Statutory Audit: Annual audit by a Chartered Accountant
- MCA Filings: Regular company law filings (AOC-4, MGT-7) with MCA
- Scale Based Regulation: Compliance varies by NBFC layer (Base, Middle, Upper, Top)
How The Ledger Company Can Help
The Ledger Company provides comprehensive NBFC registration and compliance services. We assist with company incorporation, business plan preparation, RBI application filing, and ongoing regulatory compliance. Our team includes finance and banking compliance experts who ensure your NBFC meets all RBI requirements. Schedule a consultation to start your NBFC registration.
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