NBFC Registration in India: RBI Approval Process, Eligibility, Documents & Key Costs

The financial services sector in India offers significant opportunities for companies engaged in lending, investment, and other permitted financial activities. However, a company intending to carry on business as a Non-Banking Financial Company (NBFC) generally needs a Certificate of Registration (CoR) from the Reserve Bank of India (RBI), subject to applicable exemptions and regulatory conditions.

What is NBFC Registration?

NBFC registration is the regulatory process through which an eligible company obtains RBI approval to commence or carry on specified non-banking financial activities. The applicable regulatory requirements depend on the proposed NBFC category and its business model.

RBI's current regulatory framework includes categories such as NBFC-ICC, NBFC-MFI, NBFC-Factor, NBFC-P2P, NBFC-AA and other specialised entities. Therefore, identifying the correct category before applying is an important first step.

Eligibility for NBFC Registration

The applicant must generally be a company incorporated under the Companies Act and satisfy the conditions prescribed by RBI. One of the key entry requirements is the Net Owned Fund (NOF), which varies according to the type of NBFC.

For example, RBI's regulatory handbook specifies a current NOF of ₹2 crore for an NBFC-ICC that does not accept or intend to accept public funds and does not have or intend to have customer interface. For an NBFC-ICC that accepts or intends to accept public funds and/or has or intends to have customer interface, the current NOF requirement is ₹10 crore. Certain specialised NBFC categories have different requirements.

RBI Process for NBFC License

The broad process for obtaining an NBFC License includes:

  1. Incorporate the company: Establish an eligible company with appropriate objects in its constitutional documents.
  2. Meet capital requirements: Ensure that the company satisfies the applicable NOF requirement.
  3. Prepare the application: Compile corporate, financial, ownership, management and business-related information required by RBI.
  4. Submit the application online: RBI provides an online NBFC registration form through its PRAVAAH portal.
  5. Regulatory examination: RBI examines the application and supporting information to determine whether the applicant meets the applicable statutory and regulatory requirements.
  6. Grant of CoR: If the application satisfies the prescribed conditions, RBI may issue the Certificate of Registration, enabling the company to undertake permitted activities subject to continuing compliance.

Documents Generally Required

The exact documentation varies by NBFC category, but an application may require:

  • Certificate of Incorporation and constitutional documents
  • Details of promoters, directors and shareholders
  • PAN and other identification details
  • Audited financial statements, where applicable
  • Details and evidence relating to Net Owned Fund
  • Business plan and projected financial information
  • Details of the proposed activities and operational structure
  • Information relating to management and source of funds
  • Declarations, certificates and other documents prescribed by RBI

RBI separately publishes document checklists for different NBFC categories, so applicants should verify the checklist applicable to their proposed business.

NBFC Registration Fees and Professional Assistance

The overall cost of setting up an NBFC should not be viewed only in terms of an application fee. Expenses can include company incorporation, professional documentation, compliance preparation, regulatory advisory and other operational requirements. The actual professional cost depends on the complexity and category of the proposed NBFC.

Businesses seeking assistance can engage an experienced NBFC Registration Consultant to help assess eligibility, prepare documentation, structure the application and coordinate the compliance process.

Why Choose ASC Group?

ASC Group assists businesses with regulatory and corporate compliance requirements, including support related to NBFC registration, documentation and RBI regulatory processes. Its professional team can help applicants understand the applicable NBFC category, prepare the required paperwork and navigate the registration procedure.

Obtaining an NBFC approval is only the beginning; maintaining ongoing compliance with RBI directions is equally important. Therefore, businesses should evaluate their proposed activities, capital structure and regulatory obligations carefully before commencing operations.

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