NBFC Registration
Non-Banking Financial Company - Start your lending and financial services business with RBI approval
- Complete RBI Registration Process
- Minimum Capital: ₹2 Crores
- Certificate of Registration (CoR)
- Expert Compliance Support
- Documentation & Filing Assistance
- Post-Registration Guidance
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8 REASONS TO REGISTER AN
NBFC
Financial Business
Legally conduct lending, investment, and financial services
RBI Regulation
Operate as RBI-regulated financial institution with credibility
Lending Business
Provide loans, advances, and credit facilities to customers
Investment Activities
Engage in investment and asset financing activities
High Credibility
RBI license provides trust and credibility to customers
Diverse Services
Offer multiple financial products and services
Business Growth
Access to formal financial sector with growth potential
Legal Framework
Operate within regulated framework with legal protection
What is an NBFC?
A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 2013, and engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature. NBFCs are regulated by the Reserve Bank of India (RBI) under the RBI Act, 1934.
NBFCs are financial institutions that provide banking services without meeting the legal definition of a bank. They cannot accept demand deposits (current account, savings account) or issue cheques drawn on itself. However, they can accept term deposits (fixed deposits) and provide loans. NBFCs play a crucial role in financial inclusion and credit penetration in underserved markets.
To operate as an NBFC, a company must obtain a Certificate of Registration (CoR) from RBI. The company must have minimum Net Owned Funds (NOF) of ₹2 crores and must be engaged in financial business as its principal business (financial assets should constitute more than 50% of total assets and income from financial assets should be more than 50% of gross income).
Types of NBFCs
Asset Finance Company (AFC)
Financing physical assets for productive/economic activity like automobiles, tractors, machinery
Infrastructure Finance Company (IFC)
Provides financing to infrastructure projects with at least 75% assets in infrastructure
Loan Company
Provides loans and advances as principal business activity
Investment Company
Acquires securities as principal business activity
NBFC-MFI
Micro Finance Institution providing financial services to low-income individuals
Housing Finance Company
Provides finance for purchase/construction/renovation of houses
NBFC-Investment & Credit Company
Engaged in providing loans and investments
NBFC-Factors
Engaged in factoring business of receivables
NBFC-P2P
Peer-to-peer lending platform as intermediary
NBFC-Account Aggregator
Collect and provide financial data under RBI framework
Mortgage Guarantee Company
Provides guarantee for housing loans
Core Investment Company
Holds investments in group companies as principal business
Key Features of NBFC
RBI Regulated
Regulated and supervised by Reserve Bank of India
Limited Banking Powers
Can provide most banking services except demand deposits
Lending Business
Can provide loans, advances, and credit facilities
Accept Deposits
Can accept term deposits (subject to RBI guidelines)
Investment Activities
Can acquire shares, stocks, bonds, and securities
Asset Financing
Can provide finance for purchase of physical assets
Leasing & Hire Purchase
Can engage in leasing and hire-purchase financing
Insurance Business
Can act as corporate agent for insurance companies
Factoring Services
Can provide invoice discounting and factoring
Chit Fund Management
Can manage chit fund business (with separate approval)
Eligibility Criteria for NBFC Registration
Financial Requirements
- Minimum Net Owned Funds (NOF): ₹2 Crores
- Financial assets > 50% of total assets
- Income from financial assets > 50% of gross income
- Minimum 15% CRAR (Capital to Risk Weighted Assets Ratio)
- Maintain liquid assets as per RBI norms
Other Requirements
- Company registered under Companies Act, 2013
- Financial business as principal business activity
- Directors with fit and proper criteria
- Detailed business plan and projections
- Compliance with all RBI regulations
Documents Required
1Company Documents
- ✓ Certificate of Incorporation
- ✓ Memorandum of Association (MOA)
- ✓ Articles of Association (AOA)
- ✓ PAN Card of Company
- ✓ Board Resolution for NBFC Application
2Director/Promoter Documents
- ✓ PAN Card, Aadhaar Card of all Directors
- ✓ Address Proof of Directors
- ✓ Experience & Qualification Certificates
- ✓ Net Worth Certificate
- ✓ Income Tax Returns (Last 3 Years)
3Financial Documents
- ✓ Audited Balance Sheet
- ✓ Profit & Loss Statement
- ✓ Net Owned Funds Certificate
- ✓ Bank Statements (6 months)
- ✓ Detailed Business Plan
4Office Documents
- ✓ Registered Office Proof
- ✓ Rent Agreement/Ownership Papers
- ✓ NOC from Property Owner
- ✓ Office Setup Details
- ✓ Infrastructure Details
Important Note:
All directors must meet the 'fit and proper' criteria as per RBI guidelines. The company must have minimum Net Owned Funds of ₹2 crores at the time of application. Detailed business plan with financial projections for 3-5 years is mandatory.
NBFC Registration Process
Complete NBFC registration with RBI approval
Company
Incorporate Company
Capital
Infuse ₹2 Cr NOF
Documents
Prepare Documents
Application
File with RBI
Scrutiny
RBI Verification
Inspection
RBI Inspection
CoR
Get Certificate
Fit & Proper Criteria for Directors
All directors, key management personnel, and significant shareholders of NBFC must meet the 'Fit and Proper' criteria as prescribed by RBI. This ensures integrity, competence, and financial soundness of persons managing the NBFC.
✓Integrity & Reputation
- •No conviction for criminal offence
- •No involvement in fraudulent activities
- •Good track record in business
- •No adverse regulatory findings
- •Sound financial reputation
- •Ethical business practices
⚡Competence & Financial Soundness
- •Adequate professional qualifications
- •Relevant experience in financial sector
- •Understanding of financial regulations
- •Financial resources for capital infusion
- •Ability to manage financial business
- •Track record of compliance
Important Note:
RBI conducts thorough background verification of all directors and promoters. Any adverse finding regarding integrity, competence, or financial soundness can result in rejection of NBFC application. It's crucial to ensure all directors meet these criteria before applying.
Annual Compliance Requirements
Statutory Audit
Annual audit by qualified Chartered Accountant as per Companies Act
RBI Returns
Quarterly, Half-yearly, and Annual returns to be filed with RBI
CRAR Maintenance
Maintain Capital to Risk Weighted Assets Ratio of minimum 15%
Prudential Norms
Comply with income recognition, asset classification, and provisioning norms
NPA Management
Proper classification and reporting of Non-Performing Assets
ALM Guidelines
Adhere to Asset-Liability Management guidelines
Fair Practices Code
Follow fair practices code for lenders
KYC/AML Compliance
Implement Know Your Customer and Anti-Money Laundering procedures
Board Meetings
Conduct minimum number of board meetings as per regulations
Annual General Meeting
Hold AGM within prescribed time limits
Exposure Norms
Comply with single/group borrower exposure limits
ROC Filings
File annual returns and financial statements with ROC
What NBFC Cannot Do?
Accept Demand Deposits
Cannot accept demand deposits withdrawable on demand (savings/current account)
Issue Cheques
Cannot issue cheques drawn on itself to depositors
Part of Payment System
Cannot be part of payment and settlement system
Foreign Exchange Business
Cannot undertake foreign exchange business without specific approval
Agricultural Activities
Cannot directly engage in agricultural, industrial, or trading activities
Guarantee Services
Cannot provide guarantee services (except NBFC-MG)
Frequently Asked Questions
Q1.What is an NBFC and how is it different from a bank?
Q2.What is the minimum capital requirement for NBFC registration?
Q3.How long does NBFC registration take?
Q4.What is the 'fit and proper' criteria for NBFC directors?
Q5.What is CRAR and why is it important for NBFCs?
Q6.Can an NBFC accept deposits from public?
Q7.What are the main activities an NBFC can undertake?
Q8.What is Net Owned Funds (NOF) in NBFC?
Q9.Are NBFCs required to get their accounts audited?
Q10.Can an NBFC convert to a bank?
Advantages & Disadvantages
Advantages
- ✓RBI regulated with high credibility
- ✓Can conduct lending business legally
- ✓Can accept term deposits from public
- ✓Multiple financial services possible
- ✓Access to formal financial sector
- ✓Better funding opportunities
- ✓Tax benefits on interest income
- ✓Asset financing opportunities
- ✓Financial inclusion benefits
- ✓Can scale business significantly
- ✓Professional and structured business
- ✓Investor and lender confidence
Disadvantages
- !High minimum capital requirement (₹2 Cr)
- !Complex registration process
- !Lengthy approval timeline (3-6 months)
- !Strict RBI regulations and compliance
- !Cannot accept demand deposits
- !Cannot issue cheques
- !High compliance cost
- !Regular RBI inspections
- !Stringent prudential norms
- !Limited to financial activities only
- !Penalties for non-compliance
- !Director fit & proper criteria
Ready to Start Your NBFC?
Get RBI license and enter the formal financial services sector