India’s financial landscape has evolved significantly, and Non-Banking Financial Companies (NBFCs) play a crucial role in promoting inclusive financial services. NBFCs offer credit, loans, investments, asset financing, and more, often filling the gap left by traditional banks.

If you’re considering entering the financial sector, obtaining NBFC registration in India is essential. This guide walks you through the process, eligibility criteria, required documentation, and estimated timelines to get your NBFC registered with the Reserve Bank of India (RBI).

What is an NBFC?

A Non Banking Financial Company (NBFC) is a financial institution that offers banking services without meeting the legal definition of a bank. It is registered under the Companies Act, 2013 and regulated by the Reserve Bank of India (RBI) under the RBI Act, 1934.

NBFCs offer:

• Personal and business loans
• Asset financing
• Leasing and hire-purchase
• Investment in securities
• Microfinance services

However, NBFCs cannot accept demand deposits, unlike traditional banks.

Types of NBFCs in India

NBFCs are categorized based on their activities and liabilities:

By Activities

• Loan Companies (LC)
• Investment Companies (IC)
• Asset Finance Companies (AFC)
• Infrastructure Finance Companies (IFC)
• Micro Finance Institutions (NBFC-MFI)
• Housing Finance Companies (NBFC-HFC)
• Core Investment Companies (CIC)

By Liability

• Deposit-taking NBFCs (NBFC-D)
• Non-deposit-taking NBFCs (NBFC-ND)

For most new entrants, forming an NBFC-ND is the starting point due to stricter regulations for deposit-taking entities.

Eligibility Criteria for NBFC Registration in India

Before initiating the application, ensure that your company meets the following eligibility criteria:

Company Structure

• Must be a company registered under the Companies Act, 2013 or the earlier Companies Act, 1956.
• It should be a private limited or public limited company.

Net Owned Fund (NOF)

• Minimum ₹10 crore for most NBFC types.
• For NBFC-MFIs and CICs, specific NOF and asset composition conditions apply.
• The NOF must be owned by funds free from outside liabilities.

Directors and Management

• Directors must have a clean financial record, no criminal background, and experience in financial services.
• At least one director should have financial sector experience (preferably in banking or NBFC operations).

Business Plan

A viable 3–5 year business plan is required, including market analysis, financial projections, and operational details.

Also Read: Types of Alternative Investment Funds in India

NBFC Registration Process: Step-by-Step

Step 1: Incorporate a Company

Register your entity as a Private Limited Company or Public Limited Company with the Ministry of Corporate Affairs (MCA).

Step 2: Meet Net Owned Fund Requirements

Raise and maintain the minimum capital requirement (₹10 crore) and deposit it in a bank as a fixed deposit. Obtain a net worth certificate from a Chartered Accountant.

Step 3: Prepare Documentation

Key documents include:

• Certificate of Incorporation
• Memorandum & Articles of Association
• Board resolution approving NBFC formation
• Net worth certificate
• Audited financials (if applicable)
• Business plan
• KYC and credit reports of directors
• Income proof and educational qualification of promoters

Step 4: Apply Online via RBI COSMOS Portal

Register on the RBI’s COSMOS portal, upload the application form, and submit all required documents online.

Step 5: Submit Physical Copies to the RBI

Along with the online application, submit a hard copy to the Regional Office of the RBI under whose jurisdiction the registered office is located.

Step 6: RBI Review & Clarifications

The RBI reviews your application, performs background checks, and may request clarifications or additional documents. This is the most time-consuming stage.

Step 7: Certificate of Registration (CoR)

If the RBI is satisfied, it issues a Certificate of Registration under Section 45-IA of the RBI Act, 1934. You are now authorized to operate as an NBFC in India.

Also Read: Documents Required for Recovery of Shares from IEPF

Timeline for NBFC Registration in India

On average, the NBFC registration process takes 6 to 9 months from start to finish. Here’s how time is typically distributed across key phases:

• Incorporating the company: 1 to 2 weeks
• Raising and verifying capital: 2 to 4 weeks
• Preparing and submitting documents: 3 to 4 weeks
• RBI review and follow-up: 3 to 6 months

The timeline may vary based on the completeness of your application, responsiveness to RBI queries, and the complexity of your business model.