Step-by-Step Guide to NBFC Registration in India

Non-Banking Financial Companies (NBFCs) have become one of the most influential pillars of India’s financial ecosystem. From offering loans to individuals and small businesses to providing investment and asset financing solutions, NBFCs bridge the gap between traditional banks and customers who require quick and flexible credit support.

If you are an entrepreneur planning to enter the financial services sector, understanding the process of NBFC registration is crucial. Since NBFCs operate under strict regulations set by the Reserve Bank of India (RBI), compliance, eligibility, and capital requirements must be carefully planned.

This guide explains everything you need to know about NBFC registration in India—from eligibility and documentation to step-by-step procedures and compliance obligations.

What is an NBFC?

An NBFC is a company registered under the Companies Act, 2013 that engages in financial activities such as loans, advances, leasing, hire-purchase, investment in securities, and asset financing. Unlike banks, NBFCs cannot accept demand deposits or issue cheques, but they play a vital role in ensuring credit penetration across sectors like microfinance, real estate, infrastructure, and small businesses.

Their flexibility, fast processing, and wide accessibility make them a preferred choice for individuals and businesses often overlooked by traditional banks.

Why Choose NBFC Registration?

The financial sector in India is evolving rapidly, with growing opportunities in lending, fintech, and wealth management. Registering as an NBFC offers several benefits:

• Access to the regulated financial services market under RBI’s supervision
• Ability to legally lend money and offer structured financial products
• Greater trust among clients due to regulatory recognition
• Opportunities to scale across lending, investment, and asset financing segments
• Potential to collaborate with fintechs, banks, and government-backed initiatives

With India’s digital economy expanding, NBFCs are poised to become key drivers of inclusive finance.

Types of NBFCs in India

Before proceeding with NBFC registration, it’s important to understand the different categories:

1. Asset Finance Companies (AFCs): Specialize in financing physical assets like machinery, vehicles, and equipment.
2. Investment Companies (ICs): Focus on acquiring securities, bonds, and shares.
3. Loan Companies (LCs): Provide loans and advances for various business and personal purposes.
4. Infrastructure Finance Companies (IFCs): Offer funding for infrastructure projects.
5. Microfinance Institutions (MFIs): Provide small loans to low-income households and rural borrowers.
6. Housing Finance Companies (HFCs): Offer loans for purchasing or constructing houses.
7. NBFC-Factor: Engage in receivables financing through factoring services.

Choosing the right category depends on your business goals, target audience, and financial capacity.

Eligibility Criteria for NBFC Registration

The RBI has laid down specific eligibility conditions for NBFC registration:

• The company must be incorporated under the Companies Act, 2013 or earlier acts.
• Minimum Net Owned Funds (NOF) of ₹10 crore are required (recently revised by RBI for new applicants).
• At least one director should have financial services or banking experience.
• The company must have a clean credit history and should not be involved in unlawful activities.
• A proper business plan and capital structure should be in place.

Documents Required for NBFC Registration

The documentation process is extensive, as the RBI ensures only genuine players enter the financial system. Some key documents include:

• Certificate of Incorporation from the Ministry of Corporate Affairs
• Memorandum of Association (MOA) and Articles of Association (AOA)
• Board Resolution for NBFC registration application
• Net worth certificate from a Chartered Accountant
• Copy of PAN, GST registration, and company financial statements
• CIBIL report and KYC details of directors and shareholders
• Bank account details showing the deposit of minimum Net Owned Funds

Step-by-Step Process of NBFC Registration

Step 1: Incorporation of Company

The first step is to incorporate a private or public limited company under the Companies Act, with financial services defined in its objectives.

Step 2: Ensure Minimum Capital Requirement

Deposit the minimum NOF of ₹10 crore in the company’s bank account and obtain a certificate from a statutory auditor confirming the same.

Step 3: Prepare Application Documents

Collect all necessary documents such as incorporation details, financials, director KYC, and a detailed business plan.

Step 4: Submit Application to RBI

Apply online through the RBI’s COSMOS portal and upload the required documents. After submission, a physical copy must be sent to the concerned RBI regional office.

Step 5: RBI Review and Verification

The RBI evaluates the application for authenticity, financial stability, promoter background, and compliance with regulations.

Step 6: Grant of NBFC License

If satisfied, the RBI issues a Certificate of Registration (CoR), officially allowing the company to function as an NBFC.

RBI Compliance for NBFCs

After registration, NBFCs must comply with continuous RBI regulations, which include:

• Maintaining minimum capital adequacy ratio (CAR)
• Submitting periodic financial and operational returns
• Following fair lending practices and grievance redressal guidelines
• Ensuring KYC/AML compliance to prevent fraud and money laundering
• Annual statutory audits and adherence to corporate governance norms

Failure to comply can result in penalties or cancellation of the license.

Challenges in NBFC Registration

While the process may seem straightforward, many applicants face challenges:

• High capital requirement, which is often a hurdle for small entrepreneurs
• Lengthy documentation and strict background verification
• Delays in approval due to compliance checks and RBI scrutiny
• Constant regulatory updates that need continuous monitoring

This is why most businesses prefer professional advisory support to simplify the NBFC registration process.

Why Choose Expert Assistance?

NBFC registration is not just about paperwork; it requires a deep understanding of RBI regulations and future compliance. A small error in application or missing documentation can lead to rejection.

Firms like Enterslice assist entrepreneurs in preparing documentation, ensuring eligibility, drafting business plans, and representing clients before the RBI. Professional guidance helps save time, minimize errors, and improve approval chances significantly.

Conclusion

NBFCs play a crucial role in India’s journey toward financial inclusion and economic growth. With opportunities in lending, fintech, and investment services, starting an NBFC can be a rewarding venture. However, the registration process is highly regulated and requires careful planning, adequate capital, and proper compliance.

By understanding the eligibility, documentation, and step-by-step process of NBFC registration, entrepreneurs can prepare better and avoid common pitfalls. Seeking expert assistance ensures smoother navigation through RBI’s stringent requirements, paving the way for a sustainable and compliant financial business.

FAQs

1. What is the minimum capital requirement for NBFC registration?

As per RBI norms, a company must have a minimum Net Owned Fund (NOF) of ₹10 crore to apply for NBFC registration.

2. How long does it take to get an NBFC license in India?

On average, the process takes 4 to 6 months, depending on documentation accuracy and RBI’s review.

3. Can a startup apply for NBFC registration?

Yes, provided it meets eligibility criteria such as incorporation, capital requirement, and promoter background checks.

4. What activities are prohibited for NBFCs?

NBFCs cannot accept demand deposits, issue cheques, or engage in agricultural or industrial activities directly.