NBFC registration is the Certificate of Registration (CoR) that a company must obtain from the Reserve Bank of India under Section 45-IA of the RBI Act, 1934 before it carries on lending, investment or other non-banking financial business as its principal business. A new applicant needs a minimum Net Owned Fund of ₹10 crore, and applications are now filed on RBI's PRAVAAH portal.
What is NBFC registration?
A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act whose principal business is lending, investing in shares and securities, leasing, hire purchase or similar financial activity. Section 45-IA of the RBI Act, 1934 says no company may commence or carry on the business of a non-banking financial institution without a Certificate of Registration from RBI and the prescribed Net Owned Fund (NOF).
Whether your company is in that business is decided by RBI's principal business test, often called the 50-50 test. If financial assets are more than 50% of total assets (net of intangible assets) and income from financial assets is more than 50% of gross income, the company is treated as an NBFC and must register. A trading or manufacturing company that lends occasionally to group companies usually does not meet the test, but one that slowly drifts into lending can cross it without noticing.
Minimum NOF was raised to ₹10 crore under RBI's scale-based regulation framework, effective 1 October 2022. Fresh applicants must have the full ₹10 crore from the start, while NBFCs registered earlier have a glide path up to 31 March 2027. Certain specialised NBFCs have different thresholds, such as ₹2 crore for peer-to-peer lending platforms and account aggregators, ₹20 crore for housing finance companies and ₹300 crore for infrastructure finance companies.
Once registered, an NBFC is regulated under RBI's scale-based framework, which places NBFCs in layers (Base, Middle, Upper and Top) according to size and risk. Most new NBFCs start in the Base Layer, with lighter but still substantial governance, capital and reporting obligations.
Who needs NBFC registration?
You need an RBI CoR if your company will carry on financial activity as its principal business. Common profiles include:
- Promoters starting a lending business – personal loans, MSME loans, gold loans, vehicle finance or consumer durable finance
- Fintech companies that want to lend from their own balance sheet rather than only partner with banks
- Groups setting up an investment company to hold and trade securities as principal business
- Microfinance institutions (NBFC-MFI) and factoring companies (NBFC-Factor)
- Peer-to-peer lending platforms (NBFC-P2P) and account aggregators (NBFC-AA)
- Existing companies whose financial assets and income have crossed the 50-50 test
Benefits of NBFC Registration
Legal authority to lend
A CoR is the only lawful route for a company to make lending or investment its principal business. Running such a business without it is a contravention of the RBI Act and invites penalty or prosecution.
Access to bank and market funding
Banks, mutual funds and debt investors lend to registered NBFCs under defined regulatory norms. Unregistered lenders find wholesale funding almost impossible to raise.
Co-lending and fintech partnerships
Registered NBFCs can enter co-lending arrangements with banks and act as regulated entities for digital lending partners, which opens a much larger distribution model.
Enforcement tools
Eligible NBFCs can use recovery mechanisms such as the SARFAESI Act above the notified asset size and loan threshold, strengthening collections.
Credibility with borrowers and investors
RBI regulation gives borrowers, equity investors and auditors comfort that governance, fair practices and grievance redressal norms apply.
Eligibility & applicability
RBI looks at the company, its money and its people. Before filing, make sure you meet these conditions:
- The applicant must be a company incorporated under the Companies Act (private or public limited); LLPs, firms and proprietorships cannot be NBFCs
- Net Owned Fund of at least ₹10 crore for an NBFC-ICC, or the specific threshold for your NBFC type, fully paid up and verifiable
- Clean, traceable source of funds – RBI examines where promoters' capital came from
- Directors and shareholders who meet fit-and-proper criteria, with at least one director having relevant finance or banking experience
- Clean credit history of the company, promoters and directors, with no defaults or regulatory action
- A realistic business plan, typically for the next several years, with matching policies
- Foreign investment, if any, compliant with FDI rules for financial services
Documents required
Company and capital documents
- Certificate of incorporation, MOA (with financial services objects) and AOA
- Audited balance sheets and profit & loss accounts (for existing companies) and latest provisional financials
- Statutory auditor's certificate of Net Owned Fund
- Bank statement and fixed deposit receipt evidencing the capital
- Board resolution approving the application and authorising the signatory
Promoter and director documents
- KYC, profile and experience details of each director
- Declarations and undertakings by directors in RBI's format
- Credit information reports of the company, promoters and directors
- Source-of-funds documentation and shareholding chart showing ultimate beneficial owners
Business documents
- Business plan with projected balance sheet and profit & loss
- Loan, KYC, fair practices code, ALM and other board-approved policies
- Organisation structure and details of key managerial personnel
- IT and information security set-up summary, especially for digital lenders
Step-by-step NBFC registration process
The steps below reflect how a fresh NBFC-ICC application is typically prepared and filed.
Decide the NBFC type and structure
We confirm whether you need an investment and credit company, MFI, factor, P2P or other category, and whether a fresh registration or acquisition of an existing NBFC (which itself needs RBI prior approval) fits your timeline.
Incorporate or align the company
Incorporate a company with financial services objects, or amend the objects of an existing company, and appoint a board that meets RBI's experience and fit-and-proper expectations.
Infuse and park the NOF
Promoters bring in the capital through traceable banking channels. It is typically kept in a fixed deposit until the CoR is issued, and the statutory auditor certifies the NOF.
Prepare the business plan and policies
Draft a credible business plan with financial projections, and board-approved policies for credit, KYC/AML, fair practices, grievance redressal and asset-liability management.
File on PRAVAAH
Submit the online application on RBI's PRAVAAH portal with all annexures. Applications that are incomplete are usually returned rather than kept pending.
Respond to RBI queries
RBI examines the file and often seeks clarifications on source of funds, promoter background, group structure or the business plan. Prompt, documented answers keep the file moving.
Receive the CoR and commence business
On approval RBI issues the Certificate of Registration. Only after this can the company start lending or investing as its principal business.
Government fees and capital
The real cost of an NBFC is the capital, not the filing. RBI's NBFC FAQs prescribe minimum Net Owned Fund by type; we have not seen a separate application fee mandated for filing on PRAVAAH. Company incorporation and ROC fees are separate and depend on authorised capital.
| Item | Amount | Note |
|---|---|---|
| Minimum NOF – NBFC-ICC (new applicant) | ₹10 crore | Effective 1 October 2022; existing NBFCs to comply by 31 March 2027 |
| Minimum NOF – NBFC-P2P / NBFC-AA | ₹2 crore | As per RBI NBFC FAQs |
| Minimum NOF – Housing Finance Company | ₹20 crore | As per RBI NBFC FAQs |
| Minimum NOF – NBFC-IFC / IDF-NBFC | ₹300 crore | As per RBI NBFC FAQs |
Professional charges are quoted separately after reviewing your case. Government fees are paid directly to the authority.
How long does NBFC registration take?
RBI does not publish a fixed processing time that you can rely on. In practice the preparation phase (company, capital, policies) takes a few weeks, and RBI's examination can take several months, especially if promoters are new to financial services or the group structure is complex. Plan your launch and hiring around a realistic window rather than the earliest possible date.
| Stage | Typical time |
|---|---|
| Company set-up, NOF infusion and auditor certificate | 2–6 weeks |
| Business plan and policy drafting | 2–4 weeks (can run in parallel) |
| RBI examination and queries | Several months; varies case to case |
Validity of the NBFC CoR
The Certificate of Registration does not expire, but it is conditional. RBI can cancel it if the company stops carrying on financial business, fails to maintain the minimum NOF, or contravenes the RBI Act or directions. Changes in control or management (for example, acquisition of a large stake or change of more than the specified share of directors) need RBI's prior approval, so the CoR is only as safe as your ongoing compliance.
Compliance after registration
- Maintain the minimum NOF and capital adequacy applicable to your layer and category
- File periodic returns and statements with RBI through its reporting portals
- Comply with KYC/AML directions and report to FIU-IND as required
- Become a member of all credit information companies and submit data regularly
- Follow fair practices code, digital lending directions and grievance redressal norms, including appointing a grievance officer
- Seek RBI prior approval before change in control, management or significant shareholding
- Meet Companies Act compliances such as ROC annual filing and statutory audit
Fresh NBFC registration vs acquiring an existing NBFC
| Point | Fresh registration | Acquisition of existing NBFC |
|---|---|---|
| RBI approval | Certificate of Registration | Prior approval for change in control/management |
| Capital | ₹10 crore NOF upfront (NBFC-ICC) | Target must meet NOF glide path; top-up may be needed |
| History risk | None – clean start | Inherits past compliance and tax issues; due diligence essential |
| Public notice | Not required | Prior public notice of change in control is required |
Common mistakes & rejection reasons
Untraceable promoter capital
Capital routed through multiple layers or unexplained loans is the most frequent reason RBI asks for more information or returns an application.
Board without finance experience
A board of family members with no lending or banking background weakens the fit-and-proper assessment. Bring in an experienced independent or whole-time director early.
Generic business plan
Copy-paste projections that do not match the proposed product, geography or funding sources invite detailed queries.
Lending before the CoR
Starting operations, even on a small scale, before registration is a contravention and can sink the application.
Ignoring group entities
RBI looks at the whole group. Undisclosed related companies, especially other financial entities, create credibility problems.
Penalties for carrying on NBFC business without registration
According to RBI, carrying on lending, investment or deposit-taking as principal business without a Certificate of Registration contravenes the RBI Act, 1934 and can lead to penalty, fine or prosecution. Registered NBFCs that breach the Act or RBI's directions can be penalised and can have their CoR cancelled. The public is encouraged to report unregistered entities to RBI's regional offices.
Practitioner tips
- Keep a clean paper trail for every rupee of NOF – bank statements of each promoter, their ITRs and the funding source. In our experience this single file answers most of RBI's first-round questions.
- Write the business plan for the product you will actually launch, with realistic disbursement and borrowing numbers. An honest, smaller plan reads better than an aggressive one with no funding lines.
- If you are an existing company drifting into lending, run the 50-50 test on your last few balance sheets. Crossing it unregistered is a bigger problem than applying early.
- Compare a fresh application with acquiring an existing NBFC. Acquisition still needs RBI's prior approval and careful due diligence of past compliance, so it is not automatically faster.
How Lawgical Guru helps
Structuring and feasibility
We confirm whether your model needs registration, which NBFC category fits, and whether a fresh CoR or takeover route is more practical.
Company set-up
We incorporate the company with appropriate objects through private limited company registration or align an existing company's MOA.
Application drafting
We prepare the application, director declarations, business plan narrative and the core policy set required at filing.
PRAVAAH filing and query handling
We file the application and draft structured replies to RBI's queries with supporting evidence.
Post-registration compliance
We help set up return calendars, CIC membership and corporate compliances so the CoR stays in good standing.
NBFC Registration: frequently asked questions
What is the minimum capital to start an NBFC in India?
A new NBFC-Investment and Credit Company needs a minimum Net Owned Fund of ₹10 crore, applicable since 1 October 2022. Some categories differ: ₹2 crore for peer-to-peer lending platforms and account aggregators, ₹20 crore for housing finance companies and ₹300 crore for infrastructure finance companies. Existing NBFCs have until 31 March 2027 to reach ₹10 crore.
Where is the NBFC application filed now?
RBI's NBFC FAQs state that applications for registration are submitted on the PRAVAAH portal (pravaah.rbi.org.in). Earlier, applications were made through RBI's COSMOS system. The application must be accompanied by the documents RBI prescribes, and incomplete applications are generally returned.
What is the 50-50 principal business test?
RBI treats a company as carrying on financial business as its principal business when its financial assets exceed 50% of total assets (net of intangible assets) and its income from financial assets exceeds 50% of gross income. A company meeting both conditions must register with RBI as an NBFC.
Can an LLP or partnership register as an NBFC?
No. Under the RBI Act, an NBFC must be a company incorporated under the Companies Act, 1956 or 2013. LLPs, partnership firms and proprietorships cannot obtain a Certificate of Registration. Unincorporated bodies that accept deposits are prohibited from doing so under the RBI Act.
Can a new NBFC accept public deposits?
New NBFCs are registered as non-deposit-taking companies. RBI has not been granting deposit-taking registrations to new NBFCs for many years, so a fresh entity should plan to fund itself through equity, bank borrowings and market instruments instead of public deposits.
Which entities are exempt from NBFC registration?
RBI's FAQs list exemptions for SEBI-registered alternative investment funds, merchant bankers and stock brokers, IRDAI-registered insurers, Nidhi companies, chit fund companies, stock exchanges and mutual benefit companies, among others. Companies that do not access public funds, have no customer interface and have assets below ₹1,000 crore can operate as unregistered Type I NBFCs.
How long does RBI take to grant an NBFC licence?
There is no fixed timeline you can rely on. Preparing the company, capital and policies takes a few weeks, and RBI's examination typically runs into several months, depending on promoter background, group structure and how quickly queries are answered. A complete, well-documented file is the biggest factor within your control.
What is scale-based regulation for NBFCs?
Scale-based regulation is RBI's framework that classifies NBFCs into Base, Middle, Upper and Top layers based on size, activity and risk. Regulatory requirements on capital, governance and disclosures rise with each layer. Most newly registered NBFCs fall in the Base Layer until they grow beyond the asset size thresholds RBI prescribes.
What happens if a company lends without NBFC registration?
Carrying on lending or investment as principal business without a Certificate of Registration contravenes the RBI Act, 1934. RBI states such conduct can attract penalty, fine or prosecution. It also makes loan recovery and funding difficult and can prevent the company from obtaining registration later.
Is RBI approval needed to change shareholders of an NBFC?
Yes, for significant changes. RBI's directions require prior approval for acquisition or transfer of control, changes in shareholding beyond specified limits and changes in management beyond the prescribed share of directors (excluding independent directors). A prior public notice is also required in these cases.
Reviewed by Satyam Gupta, Company Secretary (CS) & Advocate
8+ years of industry experience. This page was last reviewed on 16 October 2026 against the official sources below. Rules and fees change — confirm on the official portal before you apply.