Guide to NBFC Registration in India - NBFC Advisory

1. Guide to NBFC Registration in India India's financial ecosystem has significantly expanded in the last two decades, with Non-Banking Financial Companies (NBFCs) emerging as vital players. These entities offer various financial services, including loans, investments, asset financing, and more — often filling the gaps left by traditional banks. If you're planning to start an NBFC, understanding the registration process is essential. This guide breaks down everything you need to know about NBFC registration in India, covering the eligibility, documentation, process, and compliance. What is an NBFC? A Non-Banking Financial Company (NBFC) is a financial institution registered under the Companies Act, 2013 (or earlier, the Companies Act, 1956). Though NBFCs do not hold a banking license, they offer many of the same services as banks, such as: ● Providing loans and advances ● Credit facilities ● Leasing, hire-purchase, and asset financing ● Investment in shares and bonds ● Microfinance and housing finance services However, NBFCs cannot accept demand deposits, issue cheques drawn on themselves, or be part of the payment and settlement system. Why is NBFC Registration in India Important? NBFCs are regulated by the Reserve Bank of India (RBI) to ensure that financial practices are transparent, secure, and beneficial to the economy. Registering your NBFC with the RBI not only gives legal status but also builds trust with customers and investors. RBI registration is mandatory for any company engaged in financial activities where the financial assets constitute more than 50% of its total assets and income.

2. Types of NBFCs in India Before initiating the NBFC registration process, it is essential to identify which type of NBFC you wish to register. The common categories include: 1. NBFC-Investment and Credit Company (NBFC-ICC) 2. NBFC-Micro Finance Institution (NBFC-MFI) 3. NBFC-Factors 4. NBFC-Infrastructure Finance Company (NBFC-IFC) 5. Core Investment Company (CIC) 6. Housing Finance Company (regulated by NHB) Each type has different capital requirements and compliance guidelines. Eligibility Criteria for NBFC Registration in India To register an NBFC, your business must meet specific eligibility criteria set by the RBI: ● The company must be incorporated under the Companies Act. ● Minimum Net Owned Fund (NOF) of ₹2 crores. ● At least one director must have experience in financial services. ● Clean credit history and financial integrity of directors and promoters. ● A proper business plan for the proposed financial activity. For foreign investment, the company must comply with FDI policy guidelines as well.

3. Step-by-Step Process of NBFC Registration in India Registering an NBFC involves both company registration and RBI licensing. Here’s the step-by-step guide: 1. Company Incorporation The first step is to incorporate a Private or Public Limited Company with a financial objective as the main activity. ● Apply for name approval via MCA ● Draft and file MOA & AOA ● Obtain PAN, TAN, and CIN 2. Meet the Net Owned Fund (NOF) Requirement Ensure your company has a minimum NOF of ₹2 crores. The amount must be deposited in the company’s bank account and certified by a Chartered Accountant. 3. Prepare Required Documentation You will need: ● Company PAN and Certificate of Incorporation ● MOA & AOA ● Directors’ KYC documents ● Credit reports of directors and shareholders ● Banker’s Report showing NOF ● Detailed business plan for 3-5 years ● Board resolution for NBFC incorporation 4. Apply Online with RBI ● Create an account on RBI's COSMOS portal

4. ● Submit the online application form and upload documents 5. Submit Physical Documents to RBI After submitting the online application, a hard copy of all documents along with an application reference number must be submitted to the RBI’s regional office. 6. RBI Review & Grant of License The RBI will verify your documents and evaluate the promoters' background, financials, and business model. If everything is satisfactory, the RBI will grant you a Certificate of Registration (CoR). Know More: Comprehensive Guide to NBFC Registration in India Post-Registration Compliance for NBFCs Once the NBFC registration in India is complete, the real challenge begins — compliance. An NBFC must follow: ● RBI’s periodic returns (NBS-1, NBS-9, etc.) ● Statutory audit and asset classification norms ● Know Your Customer (KYC) and Anti-Money Laundering (AML) guidelines ● Annual return filing with ROC and RBI ● Risk management and grievance redressal systems Non-compliance can lead to penalties or cancellation of license. Common Mistakes to Avoid 1. Ignoring NOF requirements or trying to show fake capital 2. Submitting incomplete documentation 3. Choosing the wrong NBFC type

5. 4. Poor financial planning in the business proposal 5. Lack of experienced directors or team To avoid delays or rejections, it’s advisable to consult professionals specializing in NBFC registration in India. Conclusion NBFC registration in India is a gateway to tapping into one of the fastest-growing financial sectors. With rising demand for credit, digital lending, and personalized financial services, NBFCs have become more relevant than ever. However, the registration process is strict and detailed, requiring regulatory knowledge, proper documentation, and financial integrity. Partnering with legal and financial experts can help you complete the process smoothly and ensure long-term compliance. Whether you're planning to start a lending business, a microfinance unit, or a fintech startup, getting your NBFC registration done right is the first major milestone in your journey.