Company Registration for NBFC: Process, Eligibility, Documents & RBI Requirements

India’s financial sector is expanding rapidly. NBFCs (Non-Banking Financial Companies) are central to this growth. They lend to farmers, MSMEs, homebuyers, and individuals who may not qualify for bank loans. Over 10,000 registered NBFCs operate in India today, serving more than 100 million customers.

But starting an NBFC is not simple. Before lending even one rupee, your company must be incorporated under the Companies Act, 2013 and hold a valid Certificate of Registration (CoR) from the Reserve Bank of India under Section 45-IA of the RBI Act, 1934.

This blog is a complete guide to NBFC registration in 2026 covering the latest RBI updates, company registration steps, eligibility norms, document requirements, the application process, and ongoing compliance obligations.

Important: The RBI has issued significant amendments in 2025 and 2026 that change which companies need to register, how they apply, and what exemptions are now available. All applicants must review the latest framework before filing.

What is an NBFC? A Plain-Language Explanation

An NBFC is a company registered under the Companies Act, 2013 that is primarily in the business of financial activities such as:

• Lending money through loans and advances
• Acquiring shares, stocks, bonds, debentures, and government securities
• Hire-purchase financing and leasing
• Microfinance and rural credit services
• Infrastructure financing
• Asset management and investment activities

Unlike a bank, an NBFC cannot accept demand deposits (like savings accounts), cannot issue cheques drawn on itself, and is not part of India’s payment and settlement system. However, NBFCs fill critical credit gaps — especially in semi-urban and rural India where bank penetration is still limited.

Know More: What is an NBFC?

The 50-50 Principal Business Test

Under RBI’s long-standing rule, a company is classified as an NBFC only if it passes the 50-50 test. Both conditions must be met simultaneously:

• At least 50% of the company’s total assets must be financial assets
• At least 50% of the company’s gross income must come from financial activities

If both conditions are not met, the company is not treated as an NBFC, even if it does some lending or investment. This test also determines whether a company qualifies as an Unregistered Type I NBFC under the new 2026 framework (explained below).

Latest RBI Updates: What Changed in 2025 and 2026

The RBI has introduced sweeping regulatory changes for NBFCs in the past 12 months. Every new applicant must understand these updates before proceeding.

RBI NBFC Registration Directions, 2025 (Effective November 28, 2025)

On November 28, 2025, the RBI issued new consolidated directions titled the RBI (Non-Banking Financial Companies Registration, Exemptions and Framework for Scale Based Regulation) Directions, 2025. This replaced many of the earlier scattered circulars and guidelines with a single updated framework. Key changes included:

• A restructured categorisation of NBFCs based on their activity type
• A clearer definition of what constitutes ‘public funds’ (expanded significantly)
• Updated registration requirements aligned with the Scale-Based Regulation framework
• Revised applicability of the 50-50 principal business criteria

Amendment Directions, April 29, 2026 (Effective July 1, 2026)

On April 29, 2026, the RBI issued further amendment directions — the RBI (NBFC — Registration, Exemptions and Framework for Scale Based Regulation) Amendment Directions, 2026 — effective from July 1, 2026. This is the most significant update for new applicants in recent years.

New Category — Unregistered Type I NBFC: For the first time, certain NBFCs are now EXEMPT from mandatory RBI registration. This exemption is narrow and conditional — but it is a genuine regulatory ease for low-risk, non-public-facing entities.

Who Qualifies as an ‘Unregistered Type I NBFC’?

Under the April 2026 Amendment, an NBFC is exempt from registration under Section 45-IA if it meets ALL three of the following conditions:

• Asset size is below Rs. 1,000 crore
• Does NOT access public funds (directly or indirectly)
• Does NOT have any customer interface

NBFCs that meet these criteria — typically internal holding companies, group treasury entities, or investment vehicles with no direct lending to the public — may operate without an RBI Certificate of Registration from July 1, 2026 onwards.

Critical Caveat: The RBI has simultaneously expanded its definition of ‘public funds’ under the 2025 Directions. Many sources of funding that were previously not considered ‘public’ are now included. Applicants must carefully verify whether their funding sources fall within this expanded definition before assuming exemption applies.

De-Registration Window for Existing NBFCs

Existing NBFCs that are already registered and now qualify as Unregistered Type I NBFCs have a one-time window to surrender their Certificate of Registration (CoR). Key details:

• Window closes: September 30, 2026
• Application portal: PRAVAAH (rbi.org.in)
• Original CoR must be physically submitted to RBI
• Submit 3 years of audited financial statements
• Statutory Auditor’s Certificate confirming absence of public funds and customer interface
• Board resolution confirming no intention to access public funds in future

Simplified Registration Process (December 2025)

In December 2025, the RBI also simplified the registration process for new NBFC applicants. Key improvements include:

• The number of documents required for registration has been reduced from 45 to 7 to 8 core documents.
• Two separate application tracks now exist based on whether the NBFC accepts public funds and whether it has a customer interface.
• Applications are now submitted through the PRAVAAH portal instead of the older COSMOS system.

Link RBI PRAVAAH Portal: https://pravaah.rbi.org.in — The new single portal for all NBFC-related applications, compliance submissions, and communications with RBI.

Scale-Based Regulation (SBR) Framework — Fully Operational in 2026

The RBI’s Scale-Based Regulation framework, introduced in 2021 and phased in over 2022 to 2025, is now fully operational. All NBFCs are classified into four tiers:

New applicants will enter the Base Layer. As the company’s assets grow past Rs. 1,000 crore, it moves to the Middle Layer — triggering additional compliance, governance, and reporting requirements.

NBFC vs Bank: Key Differences

Types of NBFC in India (2026)

Choosing the right NBFC category is a critical decision. The RBI classifies NBFCs based on their principal business activity. Here are all major categories:

Most first-time applicants register under the ICC (Investment and Credit Company) category. It allows general lending and investment activities without the sector-specific restrictions of other categories. Always consult a qualified NBFC advisor to confirm the right category for your business model.

Step 1: Company Registration The Foundation

The RBI only grants NBFC registration to companies incorporated under the Companies Act, 2013. LLPs, trusts, partnership firms, and sole proprietorships are not eligible.

Eligible Company Structures

• Private Limited Company: Most common choice. Easier to incorporate, lower compliance cost, suitable for most new NBFCs.
• Public Limited Company: Required if you plan to raise public funding or list shares in future. More compliance-intensive.

Company Name Guidelines

Your company name should reflect financial activity. The RBI is cautious about approving NBFC licences for companies with generic names that do not indicate financial services.

MCA Incorporation Steps

1. Obtain Digital Signature Certificates (DSC): Required for all proposed directors.
2. Get Director Identification Numbers (DIN): Applied through SPICe+ form on MCA portal.
3. Reserve company name: Use the RUN (Reserve Unique Name) application on MCA.
4. File SPICe+ with MOA and AOA: Include financial activities in the objects clause of the MOA — this is mandatory.
5. Obtain Certificate of Incorporation (CoI): Issued by the Registrar of Companies (ROC).
6. Open company bank account: A current account in the company’s name is required before depositing NOF.
7. Apply for PAN and TAN: Required for the company before filing the NBFC application.

Link MCA Portal: www.mca.gov.in — Company registration, DIN applications, and SPICe+ filing.

NBFC Registration Eligibility Criteria (RBI 2026)

Under Section 45-IA of the RBI Act, 1934, a company must meet all of the following conditions to be eligible for NBFC registration:

Company Must Be Incorporated Under Companies Act, 2013

Only Private Limited or Public Limited companies incorporated under the Companies Act, 2013 are eligible. The MOA must include financial activities (lending, investment, etc.) in its objects clause. If this is missing, RBI will reject the application at the first review.

Minimum Net Owned Fund (NOF) of Rs. 10 Crore

This is the most important financial requirement. The company must have a minimum Net Owned Fund (NOF) of Rs. 10 crore at the time of application.

Important Note on NOF: The minimum NOF was revised from Rs. 2 crore to Rs. 10 crore by RBI in October 2022 as part of the Scale-Based Regulation framework. All new NBFC applicants must comply with the Rs. 10 crore threshold.

How NOF is calculated:

NOF = Paid-up Equity Share Capital + Free Reserves minus Accumulated Losses minus Deferred Revenue Expenditure minus Intangible Assets

Only equity share capital counts toward NOF. Preference share capital is excluded. The NOF must be held in a lien-free fixed deposit with a scheduled commercial bank — RBI verifies this during review.

Director Experience Requirement

• At least one-third of directors must have relevant finance or banking experience
• At least one director must have a minimum of 10 years of experience in a finance company
• This director must serve as a full-time director of the applicant company
• Experience certificates and credentials must be submitted with the application

Clean Credit History

• Good CIBIL scores for all directors and major shareholders
• No wilful loan defaults with any bank or NBFC
• No write-offs or NPA history linked to the promoters
• No criminal cases, financial frauds, or regulatory violations in the background

Credible Business Plan

A detailed and realistic business plan covering at least 5 years must be submitted. This is not a formality — RBI evaluators examine it carefully. The plan must include:

• Target customer segment and market opportunity analysis
• Product or service offerings (lending, leasing, MFI, etc.)
• Revenue and profitability projections with clear assumptions
• Capital adequacy planning aligned with Scale-Based Regulation
• Risk management framework — credit risk, market risk, liquidity risk
• Proposed organisation structure with roles and experience

FEMA Compliance (Foreign Investment Cases)

If any promoter or shareholder has a foreign nationality or holds foreign investment, the company must comply with all FEMA (Foreign Exchange Management Act) requirements. FDI in NBFC sector is allowed under the automatic route subject to RBI’s applicable conditions.

Complete Documents Required for NBFC Registration (2026)

Under the simplified 2025-2026 process, the number of mandatory documents has been reduced from 45 to 7 to 8 core documents. However, supporting documents are still needed. Here is the full list:

Core Company Documents

• Certificate of Incorporation (CoI) issued by ROC
• Memorandum of Association (MOA) — must include financial activities in objects clause
• Articles of Association (AOA)
• PAN Card of the company
• CIN — Corporate Identification Number
• Registered office address proof (lease deed, utility bill, etc.)

Capital and Financial Documents

• Net Worth Certificate certified by a Chartered Accountant (as of application date)
• Bank certificate confirming Rs. 10 crore NOF held in lien-free fixed deposit
• Audited financial statements for last 3 years (if company is existing)
• Income Tax Returns of the company for last 3 years
• Statutory Auditor’s Certificate — company has not accepted public deposits
• Statutory Auditor’s Certificate — company has not commenced NBFC business

Director and Promoter Documents

• KYC of all directors: PAN, Aadhaar, passport-size photograph
• CIBIL or credit reports of all directors and major shareholders
• Educational qualifications and experience certificates of all directors
• DIR-3 KYC compliance confirmation for all directors
• Net worth certificates of each director (CA certified)
• Declarations: no criminal cases, no wilful defaults

Board Resolutions

• Board resolution authorising the NBFC registration application
• Board resolution confirming adoption of Fair Practices Code (FPC)
• Board resolution that company has not commenced and will not commence NBFC activities without RBI approval

Business Plan Documents

• 5-year business plan with projections and capital planning
• Cash flow statements for 3 years
• Risk management policy document
• KYC and AML policy framework
• IT and cyber security policy (for digital or tech-enabled NBFCs)

Know more: What Documents Are Required for Registration of NBFC

NBFC Registration Process: Step-by-Step (2026)

The registration process has two phases: company incorporation through MCA and NBFC application through the RBI’s PRAVAAH portal.

Phase 1: Company Incorporation (MCA)

Step 1: Obtain DSC and DIN for all proposed directors.
Step 2: Reserve company name on MCA portal — ensure it reflects financial or NBFC activity.
Step 3: Draft MOA and AOA. Include financial activities explicitly in the objects clause.
Step 4: File SPICe+ with MCA and obtain the Certificate of Incorporation.
Step 5: Open a bank account in the company’s name and deposit minimum Rs. 10 crore as NOF in a fixed deposit.

Phase 2: RBI Application (PRAVAAH Portal)

Step 6: Visit the RBI PRAVAAH portal at pravaah.rbi.org.in and create a new applicant login.
Step 7: Select the appropriate NBFC application track (Track A — no public funds / Track B — with public funds or customer interface).
Step 8: Fill in all company details, director information, financial data, and business plan summary.
Step 9: Upload all required documents in prescribed formats.
Step 10: Submit the online application. You will receive a Company Application Reference Number (CARN).
Step 11: Download and print the application. Attach all physical documents and submit to the concerned RBI Regional Office.
Step 12: Track application status on PRAVAAH. Respond promptly to any RBI queries or requests for additional documents.
Step 13: Once RBI is satisfied, it issues the Certificate of Registration (CoR). Only after this can NBFC activities legally begin.

PRAVAAH Portal: https://pravaah.rbi.org.in — This is the official RBI portal for all NBFC registration applications (replaced COSMOS as the submission platform).

Two Application Tracks Under the 2026 Framework

Under the simplified 2025-2026 registration process, new NBFC applications are classified into two tracks based on the nature of the proposed business:

Most applicants planning to operate as lending NBFCs — offering loans to individuals or businesses — will fall under Track B. Only pure investment entities or internal holding companies may qualify for Track A.

What Happens After Submission? The RBI Review Process

After submission, the RBI conducts a thorough due diligence process. Understanding this stage helps you prepare better and avoid delays.

What RBI Evaluates

• Business model viability — Is the plan realistic? Is there a genuine market need?
• Capital adequacy — Is the Rs. 10 crore NOF genuinely in place and verified?
• Promoter background — Are directors and shareholders financially clean?
• Management capability — Does the team have relevant experience?
• Compliance intent — Is there a proper AML, KYC, and governance framework?
• Nature of funding — Does the company access public funds? Does it have a customer interface?

Common Reasons for Delay or Rejection

• MOA does not include financial activities in the objects clause
• Company name does not reflect NBFC or financial activity
• Capital of Rs. 10 crore not confirmed through bank certificate
• Poor or undisclosed CIBIL history of directors
• Business plan is vague, unrealistic, or copy-pasted
• Incomplete KYC or experience documents for directors
• Company fails the 50-50 principal business test based on proposed activities

Processing Timeline

Under the simplified 2026 process, a well-prepared and complete application typically takes 4 to 6 months for approval. Applications with deficiencies or requiring clarifications can take 9 to 12 months. Respond to all RBI queries promptly to avoid unnecessary delays.

Ongoing Compliance After NBFC Registration

Receiving the CoR is just the beginning. NBFCs face continuous and evolving compliance obligations. Non-compliance can lead to penalties, regulatory action, or cancellation of the CoR.

Periodic RBI Returns and Filings

• NBS-1: Quarterly return on deposits (deposit-taking NBFCs)
• NBS-2: Quarterly return on prudential norms
• NBS-7: Annual statement of capital funds, risk assets, and exposures
• ALM Returns: Monthly for NBFC-ND-SI (systemically important NBFCs)
• Annual Report submission to RBI

Capital and Prudential Norms

• Maintain Capital to Risk-weighted Assets Ratio (CRAR) as prescribed
• Classify Non-Performing Assets (NPAs) per RBI’s asset classification norms
• Create provisioning for bad and doubtful debts as mandated
• Follow credit concentration limits — maximum exposure to a single borrower

Governance Requirements

• Appoint a dedicated Compliance Officer
• Form an Audit Committee, Risk Management Committee, and Nomination and Remuneration Committee
• Hold a minimum of 4 board meetings annually
• Maintain an internal audit function
• File annual secretarial compliance report

KYC and AML Compliance

• Implement RBI-prescribed KYC norms for all customers
• Register with Financial Intelligence Unit India (FIU-IND)
• File Suspicious Transaction Reports (STRs) under the Prevention of Money Laundering Act, 2002
• Maintain a documented AML policy and train staff regularly

Fair Practices Code and Customer Protection

• Adopt and publicly display the RBI’s Fair Practices Code
• Establish a grievance redressal mechanism with a Nodal Officer
• Comply with RBI guidelines on responsible lending, interest rate disclosure, and recovery practices
• Report borrower data to Credit Information Companies (CIBIL, Equifax, Experian, CRIF)

RBI NBFC Compliance Circulars: https://www.rbi.org.in/Scripts/BS_NBFCNotificationView.aspx — All master circulars, directions, and notifications for NBFC compliance.

Common Mistakes to Avoid in NBFC Registration

• Not including financial activities in MOA: RBI will reject the application if the objects clause does not cover lending or investment activities.
• Generic company name: A name like ABC Services Pvt Ltd raises doubts. Use a name that clearly signals financial activity.
• Capital on paper but not in bank: RBI verifies the Rs. 10 crore deposit through a banker’s certificate. Paper capital is not accepted.
• Copy-paste business plan: RBI evaluators identify generic plans. Your plan must reflect your specific target market and lending model.
• Directors with poor CIBIL scores: This is one of the most common grounds for rejection. Clean up credit profiles before applying.
• Assuming Track A exemption without verification: The Unregistered Type I NBFC exemption is narrow. Get legal advice before assuming you qualify.
• Missing DIR-3 KYC for directors: All directors must have updated DIR-3 KYC on MCA before submission.
• Not accounting for expanded ‘public funds’ definition: Under the 2025 Directions, many funding sources now qualify as public funds. Seek advice on your funding structure.

Conclusion

NBFC registration in India in 2026 is both an opportunity and a responsibility. The RBI has taken meaningful steps to simplify the process — reducing documents, introducing two application tracks, and creating a genuine exemption for low-risk entities. At the same time, regulatory expectations around governance, capital adequacy, and compliance have never been higher.

For any company that plans to lend, invest, or provide financial services to customers, obtaining an RBI Certificate of Registration remains mandatory. The new PRAVAAH portal, the two-track system, and the updated SBR framework mean that a well-prepared and properly advised application stands a strong chance of a timely approval.

Whether you are registering a new NBFC from scratch or reviewing your existing entity’s status under the 2026 amendments, getting professional guidance from an experienced NBFC advisory team will save time, reduce risk, and help you build a compliant, credible financial institution.
Need Help With NBFC Registration? Our NBFC Advisory team assists with company incorporation, RBI application preparation, business plan drafting, compliance setup, and end-to-end registration support under the 2026 framework.

If you are planning to register an NBFC or need clarity on the latest RBI regulations, our NBFC Advisory team is here to help — bringing deep regulatory knowledge and hands-on experience to every stage of your journey.

Need expert guidance? Get in touch with our consultants today.

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