NBFC Company Registration

Different Types of NBFCs in India

The RBI recognises different types of NBFCs based on their financial activities, operating models and regulatory responsibilities. Selecting the correct category is important because registration conditions and compliance requirements differ across businesses.

• Investment and Credit Company (NBFC-ICC): An NBFC-ICC primarily carries out lending, investment or financing activities. This category includes many businesses offering personal loans, business loans, consumer finance, vehicle finance and other credit products. The earlier Asset Finance Company, Loan Company and Investment Company categories were combined into NBFC-ICC.

• Microfinance Institution (NBFC-MFI): An NBFC-MFI provides collateral-free microfinance loans to eligible low-income households. Under the RBI's applicable microfinance rules, a qualifying household has annual income of up to Rs 3 lakh, and an NBFC-MFI must satisfy the prescribed qualifying-asset requirement.

• Peer-to-Peer Lending Platform (NBFC-P2P): An NBFC-P2P provides an online platform connecting lenders and borrowers. It operates as an intermediary and must comply with specific RBI restrictions on lending activities, fund transfers and customer protection. Read our NBFC P2P Lending Registration Guide.

• Account Aggregator (NBFC-AA): An NBFC-AA facilitates consent-based sharing of financial information between authorised financial information providers and users. It does not operate like an ordinary lending company and must comply with specific RBI data security and consent requirements.

• Core Investment Company (CIC): A CIC primarily holds investments in group companies. CICs meeting specified regulatory criteria require RBI registration and must comply with rules relating to investments, leverage and corporate governance.

• Infrastructure Finance Company (NBFC-IFC): An NBFC-IFC primarily finances infrastructure activities, such as transport, power and other eligible infrastructure projects. It must satisfy higher financial and regulatory requirements applicable to this specialised category.

• NBFC-Factor: An NBFC-Factor provides financing through the purchase or assignment of eligible trade receivables. This helps businesses manage working capital by receiving funds against outstanding invoices.

• Housing Finance Company (HFC): An HFC primarily provides housing-related finance. It is subject to specific RBI regulatory requirements for housing finance institutions.

Other specialised categories include Infrastructure Debt Fund NBFCs, Mortgage Guarantee Companies and certain financial holding companies.

RBI Classification Based on Size

Apart from business activities, the RBI also classifies NBFCs under its Scale-Based Regulation system.

The regulatory layer determines which additional governance, capital, disclosure and risk-management requirements apply

Eligibility Criteria for NBFC Registration in India

Before applying for NBFC registration, promoters must check whether their proposed company meets the applicable eligibility requirements. RBI examines the company's financial position, ownership, directors, proposed activities and ability to conduct financial business responsibly.

The following are important conditions to consider.

• Company Incorporation: The applicant must be a company incorporated under the Companies Act, 1956 or Companies Act, 2013, as applicable. A Private Limited Company or Public Limited Company can apply, subject to meeting RBI requirements. A partnership firm or LLP cannot obtain ordinary NBFC registration under Section 45-IA in place of an eligible company.

• Minimum Net Owned Fund: The company must maintain the prescribed NOF for its proposed NBFC category. For a new customer-facing NBFC-ICC, the general minimum is Rs 10 crore. Different financial requirements apply to some specialised NBFC categories.

• Principal Business Criteria: RBI generally applies the 50-50 test to determine whether a company is principally engaged in financial activities. This means financial assets should constitute more than 50% of total assets, and income from financial assets should constitute more than 50% of gross income. The test is relevant to NBFC classification and does not replace other registration requirements.

• Experience of Directors: The company should have a suitable management team with knowledge of financial services and lending operations. RBI's scale-based requirements provide that at least one director should have relevant experience working in a bank or NBFC.

• Fit and Proper Requirements: RBI examines the suitability of promoters and directors, including their background, financial standing, integrity, relevant experience and credit history. A satisfactory profile helps demonstrate the company's ability to operate a regulated financial business.

• Business Plan: The applicant must prepare a practical business plan explaining its proposed lending activities, target customers, funding arrangements, risk controls and financial projections. A clear plan helps RBI understand how the company intends to operate.

• Source of Funds: Promoters should be able to explain and document the lawful source of funds invested in the company. Borrowed funds cannot simply be treated as the company's Net Owned Fund.

A well-prepared NBFC Business Plan can support the application by presenting the company's financial projections, business strategy and proposed operations.

Minimum Capital Requirement for NBFC Registration in 2026

The minimum capital requirement is one of the most important conditions for obtaining an RBI NBFC licence. Many older articles mention Rs 2 crore as the general requirement, but this figure is not sufficient for most new customer-facing NBFC applications.

Under RBI's revised capital requirements, new applicants in several main categories generally need at least Rs 10 crore in Net Owned Fund. Certain categories have different minimum requirements.

Category-Wise Net Owned Fund Requirements

Specialised categories such as NBFC-IFC, HFC and Mortgage Guarantee Companies may have higher requirements. The correct threshold must be checked against the category-specific RBI directions. For certain existing NBFC-ICCs, NBFC-MFIs and NBFC-Factors covered by the transitional arrangement, RBI provided a phased increase to Rs 10 crore by 31 March 2027. This transitional benefit should not be confused with the requirements for new applicants.

What Is Net Owned Fund?

Net Owned Fund (NOF) represents the company's eligible owned capital after making the deductions prescribed by RBI. It is not always the same as paid-up share capital, the balance in a bank account or the total amount invested by promoters. NOF is calculated using eligible paid-up capital and reserves, after deducting accumulated losses, intangible assets and specified investments or exposures.

For example, depositing Rs 10 crore into a company's bank account does not automatically establish that its regulatory NOF is Rs 10 crore. The company must demonstrate that the funds qualify under RBI's definition and that all applicable deductions have been considered. Promoters should obtain a proper NOF calculation and supporting financial documentation before submitting the registration application.

Documents Required for NBFC Registration

The following documents are required to complete the NBFC Registration process:

• Certificate of Incorporation (CoI) of the company.

• PAN or CIN of the company.

• Memorandum of Association (MoA) outlining the company’s financial business activities.

• Details of the company's Directors with signatures.

• Proof of the minimum NOF of 2 crores, including a fixed deposit receipt and a banker’s certificate.

• CIBIL Reports of all company directors.

• Profit and Loss Account and Audit Balance Sheet (if the company is already operational).

• Board Resolution authorizing the formation of the NBFC.

• Proof of the company’s location.

Step-by-Step NBFC Registration Process in India

The NBFC Registration Process involves preparing the company, meeting financial conditions, submitting the RBI application and undergoing regulatory scrutiny. The applicant should understand each stage before investing substantial funds in the proposed business.

Step 1: Incorporate the Company

The first step is to establish a Private Limited Company or Public Limited Company under the Companies Act, 2013. The company's objects should support the proposed financial activities, and its incorporation documents must be properly maintained. Promoters should decide the proposed NBFC category before finalising the business structure. This helps avoid unnecessary amendments later.

Step 2: Arrange the Required Net Owned Fund

After incorporation, the company must arrange the capital required for its proposed category. For a new customer-facing NBFC-ICC, the general minimum NOF is Rs 10 crore. The funds should come from legitimate and properly documented sources. The company must also obtain the necessary financial certification and supporting documents.

Step 3: Prepare the Business Plan and Application Documents

The company should prepare a business plan explaining its lending products, customer segments, funding sources, projected income, operating expenses and approach to managing financial risks. RBI also examines the background of promoters and directors, company ownership, financial position and proposed internal controls. All supporting documents should be reviewed before filing.

Step 4: Submit the Application Through RBI PRAVAAH

The applicant should submit the applicable registration form and supporting documents through RBI's PRAVAAH Portal, following the latest filing instructions. PRAVAAH is RBI's centralised online platform for regulatory applications. Applicants can use it to submit requests and monitor the application process.

Step 5: RBI Examination and Clarifications

After submission, RBI reviews the application to assess whether the applicant meets the statutory and regulatory conditions. The examination may include financial strength, management suitability, proposed business activities and the company's ability to comply with RBI directions. RBI may request additional documents, explanations or corrections. Incomplete responses can delay the application or affect the final decision.

Step 6: Obtain the Certificate of Registration

If RBI is satisfied that the applicable conditions are met, it may grant a Certificate of Registration. The approval allows the company to undertake activities permitted under its registration and relevant RBI directions. The company must also satisfy any specific conditions attached to the approval. RBI registration is not a guarantee of permission to undertake every financial activity or accept public deposits.

NBFC Registration Fees in India

The cost of starting an NBFC depends on the proposed category, company structure, professional services, documentation requirements and capital arrangements. The minimum Net Owned Fund is often the largest financial requirement, but it should not be treated as an application fee.

The professional fees for NBFC registration depend on the services required and the complexity of the applicant's financial and ownership structure.

How Much Time Does NBFC Registration Take?

There is no guaranteed approval period for an NBFC licence. The complete timeline depends on the applicant's readiness, financial documentation, RBI scrutiny and the time needed to resolve regulatory observations. A business should allow several months for the overall process rather than assume approval within a fixed number of days. Complex ownership structures, weak documentation or an unclear business model may require additional examination.

RBI Rules and Regulations for NBFC Registration in 2026

NBFCs operate under the Reserve Bank of India Act, 1934, applicable RBI directions and the Companies Act, 2013. The regulatory requirements depend on the NBFC's activities, size, financial position and classification. The RBI introduced Scale-Based Regulation to apply different levels of supervision to NBFCs according to their size, activities and risk profile. Businesses should also review subsequent RBI updates and category-specific directions before filing applications.

Important RBI Requirements

• Capital Adequacy: NBFCs must maintain regulatory capital according to the conditions applicable to their category and layer. The capital rules help ensure that the company has the financial strength to manage business risks and potential losses.

• Asset Classification: Applicable NBFCs must identify and classify overdue loans according to RBI rules. The 90-day NPA recognition standard applies under the relevant regulatory requirements, with the phased transition for certain Base Layer NBFCs reaching its final stage on 31 March 2026.

• Fit and Proper Criteria: Promoters and directors must meet applicable suitability conditions. RBI may review their experience, financial background, integrity and previous involvement in regulated financial businesses.

• Fair Lending Practices: NBFCs engaged in lending must follow applicable customer-protection requirements. These include transparent loan terms, suitable disclosures, fair recovery practices and grievance redressal arrangements.

• Digital Lending Regulations: An NBFC conducting lending through websites, mobile applications or lending service providers must comply with applicable digital lending directions. This includes requirements concerning customer disclosures, fund flows, outsourcing and borrower protection.

• Risk Management: NBFCs must maintain appropriate internal controls for identifying, monitoring and managing credit, liquidity, operational and other relevant risks. More extensive requirements apply to certain larger and specialised NBFCs.

The principal regulatory references include the RBI's Scale-Based Regulation directions and later amendments. Requirements must be assessed according to the particular category and regulatory layer.

Compliance Requirements After NBFC Registration

Once your NBFC is registered, there are several compliance requirements to follow:

• Quarterly Returns: NBFCs must submit periodic returns to the RBI, including financial statements, liquidity ratios, and risk management reports.

• Liquidity Requirements: NBFCs with public deposits must maintain a minimum of 15% of public deposits in liquid assets.

• Audit: Annual audits and a half-yearly Asset-Liability Management (ALM) return are required.

• NPA Reporting: NBFCs must report their NPA status and adhere to the revised NPA classification norms.

• Board Approvals: Regular approval from the Board of Directors for loans to senior officers and related entities.

Why Choose Compliance Calendar LLP for NBFC Registration?

Starting an NBFC involves important financial and regulatory decisions. From selecting the correct NBFC category to preparing the business plan and submitting an RBI application, each stage requires careful planning. Incomplete documents, unsuitable capital arrangements or an unclear business model can create unnecessary delays and additional costs.

Compliance Calendar LLP provides professional assistance with NBFC Company Registration in India. Our team helps entrepreneurs, startups and financial businesses understand applicable RBI requirements, review their eligibility, prepare documentation and coordinate the application process. We focus on making the requirements easier to understand so applicants can make informed decisions before proceeding.

Our support also extends beyond the initial registration stage. We assist with business planning, applicable RBI and MCA compliance, corporate documentation and related regulatory services. Businesses considering entry into the NBFC sector through the purchase of an existing company may also explore our NBFC Acquisition and Takeover Services.