Asset Finance Company Registration

Asset Finance Company Registration. Asset Finance Company (AFC) registration is essential for businesses looking to offer loans or credit facilities for acquiring physical assets like vehicles, industrial machinery, or equipment. Classified as a category of Non-Banking Financial Company (NBFC), an AFC primarily finances tangible assets used in productive sectors. Regulated by the Reserve Bank of India (RBI), such companies must obtain a Certificate of Registration (CoR) under Section 45-IA of the RBI Act, 1934 before commencing operations. This article explains the complete registration process, eligibility criteria, required documents, and compliance obligations involved in establishing an Asset Finance Company in India.
What is an Asset Finance Company?
An Asset Finance Company (AFC) is a type of Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India (RBI) that primarily engages in financing physical assets supporting economic activity. These assets may include automobiles, tractors, generators, construction equipment, and industrial machinery. The core function of an AFC is to provide loans or credit for acquiring such tangible assets rather than offering personal or unsecured loans. As per RBI guidelines, at least 60% of the total assets of an AFC must be in asset financing. AFCs play a vital role in supporting capital investment and infrastructure development across sectors.
Pre-Requisites of Asset Finance Company Registration in India
If you plan to register a Private Limited Company for NBFC Asset Finance Company (AFC) operations, you must begin with at least two individuals as directors and shareholders.
Before applying for AFC registration with the Reserve Bank of India (RBI), it is essential to incorporate the company and gather the necessary KYC and identity documents. The following documents are the basic requirements for company incorporation and AFC registration:

Copy of PAN Card of each director/shareholder

Identity Proof – Aadhaar Card, Driving License, Passport, or Voter ID (anyone)

Address Proof – Bank Statement, Mobile Bill, Telephone Bill, or Electricity Bill (anyone)

Passport-size Photograph of each proposed director/shareholder

These documents help verify the identity, address, and financial credibility of the promoters and are mandatory for both incorporation with the Ministry of Corporate Affairs (MCA) and submission to RBI for AFC registration.
How to Register a Core Investment Company
In addition to the personal KYC documents, the following documents are necessary for registering the company’s registered office address:

Ownership Proof or a valid Rent Agreement for the premises

Recent Electricity Bill as utility proof of the business location

No Objection Certificate (NOC) from the property owner, permitting the use of the premises as the company’s registered office

These documents must be submitted during the incorporation process with the Ministry of Corporate Affairs (MCA) and are also essential for RBI verification in the Asset Finance Company registration process.
Process of Asset Finance Company Registration in India
Registering an Asset Finance Company (AFC) in India is a multi-stage and regulated process overseen by the Reserve Bank of India (RBI). Although time-consuming, the registration is critical for legally operating as an NBFC engaged in asset financing. Given the importance of RBI approval, it is advisable to follow the process meticulously. Here’s a step-by-step breakdown of the AFC registration procedure:
Step 1: Incorporate the Company
The first step is to incorporate a company under the Companies Act, 2013, either as a Private Limited or Public Limited Company. The choice of structure depends on the promoters' vision and scalability plans. Initially, the company can be registered with basic capital before raising it to the required level.
Step 2: Raise Capital to Rs.2 Crores
Once incorporated, the company must raise its authorised and paid-up share capital to at least Rs.2 crores (Rs.10 crores if accepting public deposits). Although this can be done during incorporation, it’s recommended to increase the capital after incorporation to avoid risk if the application is not approved.
Step 3: Deposit Rs.2 Crores in Fixed Deposit and Obtain No Lien Certificate
The paid-up capital must be deposited in a scheduled bank as a fixed deposit, and a No Lien Certificate must be obtained from the bank. This certificate confirms that the funds are unencumbered and available to support the company's operations.
Step 4: Prepare Required Documents and Complete RBI Checklist
The following documents must be collected and certified to complete the RBI registration checklist:

Certified copy of Certificate of Incorporation

Certified extract of the MOA’s Main Object Clause stating financial/asset financing business

Certified copy of Board Resolution approving the NBFC registration

Copy of Fixed Deposit Receipt and Banker’s Certificate of No Lien

Banker’s Report on the applicant and its group companies

CIBIL Reports of all directors and shareholders holding more than 10% equity

Educational and experience proof of promoters (finance background preferred)

These documents ensure RBI’s due diligence on financial strength, promoter credibility, and operational intent.
Step 5: Submit Online Application to RBI
An online application must be filed on the RBI's COSMOS portal for NBFC registration. Upon submission, the applicant will receive a Company Application Reference Number (CARN), which should be noted for tracking purposes.
Step 6: Submit Hard Copy to RBI Regional Office
After online submission, a physical copy of the application, along with all supporting documents and annexures, must be sent to the regional office of the Reserve Bank of India under whose jurisdiction the company’s registered office falls.
Once submitted, the RBI reviews the application and may seek clarifications or additional documents. The approval process can take several months, but receiving the Certificate of Registration (CoR) as an Asset Finance Company is a significant milestone, enabling the entity to operate legally as an NBFC.
Conclusion
Asset Finance Company registration is a structured and compliance-driven process that opens doors to India's growing financial services sector. Governed by the Reserve Bank of India, AFCs are important in funding tangible assets that drive economic activity, such as vehicles and equipment. While the registration involves multiple steps—company incorporation, capital infusion, documentation, and RBI approvals—it ensures that only credible and financially sound entities enter the market. A registered AFC not only gains legal recognition but also builds investor trust and customer confidence. With proper guidance and adherence to regulations, setting up an AFC can be a rewarding long-term venture.
If you have any queries regarding Asset Finance Company registration, then you can connect with Compliance Calendar LLP experts through email info@ccoffice.in or Call/Whatsapp at +91 9988424211.
FAQs
Q1. What is an Asset Finance Company (AFC)?
Ans. An Asset Finance Company (AFC) is a type of Non-Banking Financial Company (NBFC) that primarily provides loans or credit facilities for the purchase of physical assets such as vehicles, machinery, and industrial equipment.
Q2. How to establish a microfinance company?
Ans. To establish a microfinance company in India, register a Section 8 Company or an NBFC-MFI with RBI approval, meet capital requirements, and follow RBI guidelines for lending to low-income groups.
Q3. Is RBI registration mandatory for starting an Asset Finance Company?
Ans. Yes, RBI registration is mandatory. An AFC must obtain a Certificate of Registration (CoR) from the Reserve Bank of India under Section 45-IA of the RBI Act, 1934, before commencing operations.
Q4. What is the minimum capital requirement for AFC registration?
Ans. A company must have a minimum Net Owned Fund (NOF) of Rs.2 crores. For AFCs planning to accept public deposits, the minimum NOF requirement is Rs.10 crores.
Q5. Can a newly incorporated company apply for AFC registration?
Ans. Yes, a newly incorporated Private or Public Limited Company can apply for AFC registration, provided it meets RBI’s capital, documentation, and promoter eligibility criteria.
Q6. What percentage of business must be in asset financing?
Ans. To qualify as an AFC, at least 60% of the company’s total assets and 60% of net income must come from financing physical, productive assets.
Q7. How long does it take to get registered as an AFC?
Ans. The registration process may take 3 to 6 months or longer, depending on the completeness of documents, RBI scrutiny, and prompt response to clarifications raised during the process.
Q8. Can foreign investment be allowed in an Asset Finance Company?
Ans. Yes, Foreign Direct Investment (FDI) is allowed in AFCs under the automatic route, subject to compliance with FEMA regulations, sectoral caps, and RBI approval guidelines.

Asset Finance Company (AFC) registration is essential for businesses looking to offer loans or credit facilities for acquiring physical assets like vehicles, industrial machinery, or equipment. Classified as a category of Non-Banking Financial Company (NBFC), an AFC primarily finances tangible assets used in productive sectors. Regulated by the Reserve Bank of India (RBI), such companies must obtain a Certificate of Registration (CoR) under Section 45-IA of the RBI Act, 1934 before commencing operations. This article explains the complete registration process, eligibility criteria, required documents, and compliance obligations involved in establishing an Asset Finance Company in India.

What is an Asset Finance Company?

An Asset Finance Company (AFC) is a type of Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India (RBI) that primarily engages in financing physical assets supporting economic activity. These assets may include automobiles, tractors, generators, construction equipment, and industrial machinery. The core function of an AFC is to provide loans or credit for acquiring such tangible assets rather than offering personal or unsecured loans. As per RBI guidelines, at least 60% of the total assets of an AFC must be in asset financing. AFCs play a vital role in supporting capital investment and infrastructure development across sectors.

Pre-Requisites of Asset Finance Company Registration in India

If you plan to register a Private Limited Company for NBFC Asset Finance Company (AFC) operations, you must begin with at least two individuals as directors and shareholders.

Before applying for AFC registration with the Reserve Bank of India (RBI), it is essential to incorporate the company and gather the necessary KYC and identity documents. The following documents are the basic requirements for company incorporation and AFC registration:

Copy of PAN Card of each director/shareholder
Identity Proof – Aadhaar Card, Driving License, Passport, or Voter ID (anyone)
Address Proof – Bank Statement, Mobile Bill, Telephone Bill, or Electricity Bill (anyone)
Passport-size Photograph of each proposed director/shareholder

How to Register a Core Investment Company

In addition to the personal KYC documents, the following documents are necessary for registering the company’s registered office address:

Ownership Proof or a valid Rent Agreement for the premises
Recent Electricity Bill as utility proof of the business location
No Objection Certificate (NOC) from the property owner, permitting the use of the premises as the company’s registered office

Process of Asset Finance Company Registration in India

Registering an Asset Finance Company (AFC) in India is a multi-stage and regulated process overseen by the Reserve Bank of India (RBI). Although time-consuming, the registration is critical for legally operating as an NBFC engaged in asset financing. Given the importance of RBI approval, it is advisable to follow the process meticulously. Here’s a step-by-step breakdown of the AFC registration procedure:

Step 1: Incorporate the Company

The first step is to incorporate a company under the Companies Act, 2013, either as a Private Limited or Public Limited Company. The choice of structure depends on the promoters' vision and scalability plans. Initially, the company can be registered with basic capital before raising it to the required level.

Step 2: Raise Capital to Rs.2 Crores

Once incorporated, the company must raise its authorised and paid-up share capital to at least Rs.2 crores (Rs.10 crores if accepting public deposits). Although this can be done during incorporation, it’s recommended to increase the capital after incorporation to avoid risk if the application is not approved.

Step 3: Deposit Rs.2 Crores in Fixed Deposit and Obtain No Lien Certificate

The paid-up capital must be deposited in a scheduled bank as a fixed deposit, and a No Lien Certificate must be obtained from the bank. This certificate confirms that the funds are unencumbered and available to support the company's operations.

Step 4: Prepare Required Documents and Complete RBI Checklist

The following documents must be collected and certified to complete the RBI registration checklist:

Certified copy of Certificate of Incorporation
Certified extract of the MOA’s Main Object Clause stating financial/asset financing business
Certified copy of Board Resolution approving the NBFC registration
Copy of Fixed Deposit Receipt and Banker’s Certificate of No Lien
Banker’s Report on the applicant and its group companies
CIBIL Reports of all directors and shareholders holding more than 10% equity
Educational and experience proof of promoters (finance background preferred)

These documents ensure RBI’s due diligence on financial strength, promoter credibility, and operational intent.

Step 5: Submit Online Application to RBI

An online application must be filed on the RBI's COSMOS portal for NBFC registration. Upon submission, the applicant will receive a Company Application Reference Number (CARN), which should be noted for tracking purposes.

Step 6: Submit Hard Copy to RBI Regional Office

After online submission, a physical copy of the application, along with all supporting documents and annexures, must be sent to the regional office of the Reserve Bank of India under whose jurisdiction the company’s registered office falls.

Once submitted, the RBI reviews the application and may seek clarifications or additional documents. The approval process can take several months, but receiving the Certificate of Registration (CoR) as an Asset Finance Company is a significant milestone, enabling the entity to operate legally as an NBFC.

Conclusion

Asset Finance Company registration is a structured and compliance-driven process that opens doors to India's growing financial services sector. Governed by the Reserve Bank of India, AFCs are important in funding tangible assets that drive economic activity, such as vehicles and equipment. While the registration involves multiple steps—company incorporation, capital infusion, documentation, and RBI approvals—it ensures that only credible and financially sound entities enter the market. A registered AFC not only gains legal recognition but also builds investor trust and customer confidence. With proper guidance and adherence to regulations, setting up an AFC can be a rewarding long-term venture.

If you have any queries regarding Asset Finance Company registration, then you can connect with Compliance Calendar LLP experts through email info@ccoffice.in or Call/Whatsapp at +91 9988424211.

FAQs

Q1. What is an Asset Finance Company (AFC)?

Ans. An Asset Finance Company (AFC) is a type of Non-Banking Financial Company (NBFC) that primarily provides loans or credit facilities for the purchase of physical assets such as vehicles, machinery, and industrial equipment.

Q2. How to establish a microfinance company?

Ans. To establish a microfinance company in India, register a Section 8 Company or an NBFC-MFI with RBI approval, meet capital requirements, and follow RBI guidelines for lending to low-income groups.

Q3. Is RBI registration mandatory for starting an Asset Finance Company?

Ans. Yes, RBI registration is mandatory. An AFC must obtain a Certificate of Registration (CoR) from the Reserve Bank of India under Section 45-IA of the RBI Act, 1934, before commencing operations.

Q4. What is the minimum capital requirement for AFC registration?

Ans. A company must have a minimum Net Owned Fund (NOF) of Rs.2 crores. For AFCs planning to accept public deposits, the minimum NOF requirement is Rs.10 crores.

Q5. Can a newly incorporated company apply for AFC registration?

Ans. Yes, a newly incorporated Private or Public Limited Company can apply for AFC registration, provided it meets RBI’s capital, documentation, and promoter eligibility criteria.

Q6. What percentage of business must be in asset financing?

Ans. To qualify as an AFC, at least 60% of the company’s total assets and 60% of net income must come from financing physical, productive assets.

Q7. How long does it take to get registered as an AFC?

Ans. The registration process may take 3 to 6 months or longer, depending on the completeness of documents, RBI scrutiny, and prompt response to clarifications raised during the process.

Q8. Can foreign investment be allowed in an Asset Finance Company?

Ans. Yes, Foreign Direct Investment (FDI) is allowed in AFCs under the automatic route, subject to compliance with FEMA regulations, sectoral caps, and RBI approval guidelines.