In India’s dynamic financial landscape, Non-Banking Financial Companies (NBFCs) serve as vital engines of credit, particularly for underserved segments and the burgeoning fintech ecosystem. For entrepreneurs, international investors, or digital lenders, obtaining an NBFC license from scratch can be a rigorous and time-intensive process. Consequently, an NBFC Takeover has become a preferred strategic route for quick market entry, allowing acquirers to leverage existing infrastructure and regulatory clearances.
This process is strictly governed by the Reserve Bank of India (RBI). As of November 28, 2025, the new RBI (Non-Banking Financial Companies – Acquisition of Shareholding or Control) Directions, 2025 have superseded previous guidelines, introducing streamlined digital applications and tighter scrutiny on international investment origins.
An NBFC takeover refers to the acquisition of control or significant shareholding in a registered NBFC by another entity. Under the 2025 Directions, “control” aligns with SEBI regulations, focusing on the power to appoint the majority of directors or control management and policy decisions.
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An NBFC takeover refers to the acquisition of control or significant shareholding in a registered NBFC by another entity. Under the 2025 Directions, “control” aligns with SEBI regulations, focusing on the power to appoint the majority of directors or control management and policy decisions.
Acquirers typically choose a takeover path based on their business health and mutual interests:
Friendly TakeoverOccurs with mutual consent, often leading to better per-share pricing and a smoother operational transition. |
Hostile TakeoverPursued without the consent of the target’s board, often by directly engaging shareholders. |
Funding-Based TakeoverPrimarily focused on acquiring the target’s cash, debt, or shares to maintain liquidity while gaining control. |
Distressed Asset TakeoverInvolves acquiring a struggling NBFC as part of a restructuring plan, injecting capital to revitalize operations. |
The 2025 Directions mandate that an NBFC must obtain prior written permission from the RBI before effecting major structural changes.
| TRIGGER EVENT | THRESHOLD FOR PRIOR APPROVAL |
|---|---|
| Change in Control | Any acquisition of control, with or without management changes. |
| Significant Shareholding | Any change (including progressive increases) resulting in the transfer of 26% or more of paid-up equity capital. |
| Foreign Investment (HFCs) | For Housing Finance Companies (HFCs) holding public deposits, any change resulting in 10% or more shareholding by a foreign investor. |
| Primary Dealers (SPDs) | Any change in shareholding pattern or capital structure for Standalone Primary Dealers. |
Exceptions: Approval is not required for shareholding changes exceeding thresholds solely due to buybacks or capital reductions approved by a court, provided it is reported to the RBI within one month.
Before moving forward, parties must ensure they meet the following benchmarks:
The 2025 Directions introduce critical safeguards regarding investments from jurisdictions with weak Anti-Money Laundering (AML) measures, as identified by the Financial Action Task Force (FATF).
The takeover process is multifaceted, involving legal drafting, financial valuation, and regulatory filing.
The parties sign a Memorandum of Understanding (MOU) to outline responsibilities. The acquirer then conducts thorough due diligence to verify the target’s financial health and regulatory track record.
All applications for prior approval must be submitted via the PRAVAAH portal. Required documents include:
Once RBI approval is received, a public notice must be published in one leading national and one local vernacular newspaper at least 30 days before the actual transfer of control. This notice allows the public to raise objections.
Parties sign the Share Purchase Agreement (SPA) only after the target obtains a No Objection Certificate (NOC) from its creditors. Assets are valued using the Discounted Cash Flow (DCF) method, certified by a Chartered Accountant.
Completion of the share transfer is not the end of the compliance journey. Acquirers must fulfill several “post-closing” obligations:
A standard takeover typically spans 3 to 6 months, depending on the complexity and RBI response times.
PHASE | ESTIMATED DURATION |
Target Identification & Planning | 1 to 2 weeks |
Financial & Legal Due Diligence | 3 to 4 weeks |
Drafting Agreements (SPA/BTA) | 1 to 2 weeks |
RBI Application & Approval | 2 to 3 months |
Post-Approval Notice & Finalization | 2 to 3 weeks |
Navigating an NBFC takeover requires a meticulous blend of financial strategy and regulatory precision. The 2025 RBI Directions have modernized the process while emphasizing the “Fit and Proper” status of acquirers and the integrity of global capital. By adhering to these strict compliance protocols, acquirers can successfully unlock the immense potential of India’s financial services market while maintaining the operational stability expected by the regulator.
An NBFC takeover is the acquisition of one NBFC by another company or NBFC through transfer of shareholding, management, or control, in accordance with RBI regulations.
NBFC takeovers are regulated by the RBI under the Reserve Bank of India (Non-Banking Financial Companies – Acquisition of Shareholding or Control) Directions, 2025, along with the Companies Act, 2013.
Yes, RBI approval is mandatory if there is acquisition of more than 26% shareholding, change in control, or change in more than 30% of the Board of Directors.
The NBFC takeover process generally takes 3 to 6 months, depending on due diligence, documentation, and RBI approval timelines
Key documents include directors’ and shareholders’ details, financial statements for the last 3 years, KYC documents, business plan, source of funds, and due diligence reports.
The NBFC must have a minimum Net Owned Fund of ₹2 crore, the buyer must meet capital requirements, satisfy RBI’s fit and proper criteria, and ensure operational viability post-takeover.
NBFC takeovers can be friendly, hostile, funding-based, or distressed asset takeovers, depending on the strategy and consent of parties involved.
Yes. A public notice must be published in national and local newspapers at least 30 days before the transfer of control or change in management.
Post-takeover, the NBFC must inform the RBI, update shareholding and directorship details with the MCA, revise internal policies, update statutory registers, and maintain fit and proper criteria.
Proper compliance ensures regulatory approval, protects investors’ interests, avoids penalties, maintains business continuity, and preserves the NBFC’s license and credibility.
