Non-Banking Financial Companies (NBFCs) play a central role in India’s financial landscape by extending credit, offering investment products, and supporting financial inclusion in segments where traditional banks may not reach effectively. With the financial system becoming more technology-driven and regulated, understanding how an NBFC is registered and what compliance obligations follow is essential.
The Reserve Bank of India (RBI), empowered under the RBI Act, 1934, regulates NBFCs to ensure financial stability, consumer protection, and systemic discipline. The latest RBI Master Directions lay down a structured framework for NBFC registration, net-owned fund (NOF) requirements, governance standards, and ongoing regulatory duties.
An NBFC is a company registered under the Companies Act that is engaged in providing financial services such as loans, investments, leasing, factoring, or asset financing. Unlike banks, NBFCs cannot accept demand deposits, do not form part of the payment system, and cannot issue cheques, but they form a major pillar of India’s credit delivery ecosystem.
Under Section 45-IA of the RBI Act, any company intending to carry on the business of a financial institution must obtain a Certificate of Registration (CoR) from the RBI before commencing operations.
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According to the RBI’s scale-based regulatory framework, Non-Banking Financial Companies (NBFCs) are classified into the following categories:
The applicable compliances vary depending on the size of the NBFC, nature of activities, leverage levels, and its systemic importance within the financial system.
Any company engaged in financial activity exceeding 50% of its total assets and total income must be registered as an NBFC. This is known as the 50-50 test.
Companies offering peer-to-peer lending, account aggregation, housing finance, microfinance, investment advisory, or infrastructure financing fall under activity-specific NBFC categories and require separate approvals.
Registration Requirements for an NBFC
To obtain an NBFC Certificate of Registration, a company must satisfy several eligibility and compliance conditions provided under the RBI Directions.
A minimum NOF of ₹10 crore is required for most NBFC categories (raised from earlier ₹2 crore).
The minimum net owned fund requirements for specialized NBFCs are
The applicant must furnish audited financial statements demonstrating the required NOF at the time of application.
The company must be registered under the Companies Act, 2013 and its MoA should specifically permit NBFC-related financial activities; otherwise, the MoA must be altered before application.
Promoters, directors, and key managerial personnel must meet RBI’s Fit & Proper criteria, which includes:
Applicants must submit:
Applications are filed online through the RBI PRAVAAH portal along with supporting documents
RBI may request additional clarifications or documents during the review.
RBI evaluates:
If satisfied, RBI grants the Certificate of Registration, authorising the company to commence NBFC operations.
S. No. | Requirement Category | Details | |
1. | Minimum NOF | Minimum ₹10 crore NOF for most NBFCs. Certain specialised NBFCs (P2P, AA, AFC small) have lower requirements. | |
2. | Incorporation of Company
| Must be a company registered under Section 3 the Companies Act, 2013. MoA must include financial activity as a primary object. | |
3. | Promoters & Directors – Fit & Proper Criteria | Must have clean credit history, financial integrity, no criminal proceedings, sound reputation, and relevant experience. | |
4. | Board Structure & Corporate Governance | Details of directors, KMPs, committees, shareholding pattern must be furnished to RBI. | |
5. | Business Plan | A well-detailed 3–5 years business plan covering business model, risk management, financial projections, and operational readiness. | |
6. | Capital Structure | Source of capital must be legitimate and well-documented; audited financials must reflect required capital. | |
7. | IT & Cybersecurity Framework | Robust IT systems for financial operations, data protection, cybersecurity, online reporting, statutory compliance. | |
8. | KYC/AML Compliance Framework | Comprehensive policy for customer onboarding, verification, monitoring, and reporting of suspicious transactions. | |
9. | Office Infrastructure | Registered office address, functional workplace, internal control mechanisms, staffing plan. | |
10. | Statutory Auditor Certificate | Certificate confirming NOF, financial soundness, and compliance with statutory requirements. | |
11. | Supporting Documents | · MOA and AOA · Certificate of Incorporation · PAN, TAN · KYC of directors/promoters · Board resolution for NBFC application · Net worth certificate · Banker’s report · Organisational structure · Financial statements (latest 3 years, if applicable | |
12. | Application Submission | File online on RBI Pravaah Portal on https://pravaah.rbi.org.in and upload all documents and pay applicable fees. | |
13. | RBI Verification & Inspection | RBI scrutinises promoters, financial statements, governance structure, public interest considerations, and risk profile. | |
14. | Grant of Certificate of Registration (CoR) | Issued after full satisfaction of eligibility and compliance requirements under Section 45-IA of the RBI Act. |
Once registered, NBFCs must follow continued compliance obligations under the RBI Directions:
NBFCs must maintain the required minimum capital, follow RBI’s capital adequacy rules, keep leverage within limits, maintain the Liquidity Coverage Ratio (LCR), and follow asset classification and provisioning norms.
NBFCs must set up key Board committees such as the Audit Committee, Nomination & Remuneration Committee, and Risk Management Committee. These committees ensure proper oversight and responsible management.
NBFCs must follow the Fair Practices Code, comply with KYC/AML rules, provide transparent loan terms, and maintain a proper grievance redressal system to resolve customer complaints.
NBFCs must file periodic returns with the RBI, including financial statements, auditor reports, compliance reports, and fraud-related information. RBI can inspect NBFCs whenever required.
NBFCs cannot accept demand deposits, cannot offer payment system services, cannot issue cheques on themselves, and must operate only within the activities permitted by the RBI.
The NBFC registration process in India is designed to balance ease of doing business with robust financial oversight. For businesses entering the financial sector, obtaining NBFC status offers credibility, regulatory recognition, and access to a rapidly expanding market. However, this also comes with significant compliance obligations, requiring strong governance, adequate capital, and consistent adherence to RBI’s regulatory framework.
With careful preparation, transparent documentation, and a strong business model, companies can successfully navigate the registration pathway and contribute to India’s dynamic financial services ecosystem.
Yes. No company can operate as an NBFC without a Certificate of Registration under Section 45-IA of the RBI Act.
Most NBFCs require a minimum NOF of ₹10 crore, while several activity-based NBFCs have lower thresholds.
On average 4-6 months, depending on documentation quality and RBI verification.
Yes, subject to FEMA regulations and FDI norms.
Yes, as evidence of a functional office and infrastructure may be requested.
Only NBFC–Deposit Taking entities (NBFC-D) can accept deposits, and they must meet additional requirements.
NBFCs may lend to most sectors except those prohibited by law or RBI.
Yes. Periodic financial, compliance, and supervisory returns must be filed regularly.
Yes. NBFCs must strictly comply with RBI’s KYC/AML Directions.
Certain non-core functions may be outsourced, but core management functions and customer due diligence cannot be outsourced.
