Incorporate your NBFC in India with Ease!
Launch your NBFC in India efforttlessly. Our dedicated team is here to guide you through every complex step of the NBFC registration process, ensuring seamless compliance while aligning with your business goals.
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Overview of NBFC Registration
As defined by Section 45-IA of the RBI Act of 1934 and the Companies Act of 2013, NBFCs (Non-Banking Financial Companies) have a significant role in financial operations that involve secured and unsecured loans, marketplace lending, investments, information services providers, and any other commercial reasons. NBFCs differ from Commercial and Cooperative Banks in that they do not need a banking license, but they are still required to go by the laws and guidelines that the Reserve Bank of India (RBI) regularly issues.
The RBI strictly regulates NBFCs and ensures they follow the policies established in Chapter III B of the RBI Act, 1934.
The NBFC registration process in India is comprehensive, requiring applicants to comply with regulatory requirements and submit all necessary documentation. This ensures alignment with NBFC registration criteria established by RBI.
Want to know the 3 Core C's for NBFC Registration?
- More than 50% of total assets are financial assets.
- The percentage of gross revenue from financial assets should be greater than 50%.
- To incorporate an NBFC, the Companies Act of 1956 or the Companies Act of 2013 should be followed.
- The company must have a minimum of INR 2 crore in net owned funds, which are determined using the company’s most recent audited balance sheet. Noted: As per a recent notification issued by RBI on October 22, 2021; – Regulatory minimum Net Owned Fund (NOF) for NBFC-ICC, NBFC-MFI and NBFC-Factors shall be increased to from ₹2 crore to ₹10 crore
- NBFCs that accept deposits: Currently, the RBI is NOT approving any new licenses in this category.
- There are two categories of non-deposit-taking NBFCs: Type 1 without customer interface and Type 2 with customer interface.
Types of NBFC
Investment and Credit Company is a company registered under the Companies Act, 2013 with its the primary business of loans and advances, asset finance, and providing finance for any activity other than the acquisition of its securities; it is also not classified as an NBFC in any other category. It is a consolidated version of prior forms such as Loan Company, Investment Company, and Assets Finance Company, allowing a single firm to carry out all three activities under the ICC brand. This firm requires a Net Owned Fund of INR 2 Crore to be started.
It’s an expanded version of the Infrastructure Finance Companies, and IFC can only be a Sponsor for this Debt Fund. IDF is a corporation controlled by the Reserve Bank of India and registered under the Companies Act, 2013. It facilitates the flow of long-term loans into infrastructure projects and can raise funds by issuing rupee or dollar-denominated bonds with a minimum duration of five years.
The MGC company’s primary goal is to provide a mortgage guarantee. Such businesses must get at least 90% of their revenue from mortgage guarantee business or at least 90% of their gross income from mortgage guarantee business. With a Net Owned Fund of INR 100 crore, MGC can get started.
A NOFHC is a financial business organisation that will allow companies or groups to establish a new bank and all other financial services firms regulated by the RBI or other financial sector regulators.
Micro Finance Institutions (NBFC-MFI) are non-deposit taking financial institutions having net owned funds of at least Rs.5 crore (for the North Eastern Region of India, it will be Rs. 2 crores). To remain MFI, it must have Qualifying Assets that account for at least 85% of its total assets. Loans disbursed to borrowers with a rural family income of not more than INR 125k or an urban and semi-urban household income of not more than INR 200K qualify as qualifying assets; the loan will be extended without collateral.
NBFC-Factors is a financial institution with a minimum net worth of Rs 5 crores whose primary business is the acquisition of receivables on discount or the financing of such receivables through loans or advances or the creation of security interests over such receivables, but does not include typical bank lending.
CIC NBFCs are involved in the acquisition of securities and shares, with shares and equity accounting for 90% of their total assets. The minimum asset size required is INR 100 crore.
This is a new generation of tech-driven NBFC that runs a common platform for lenders and borrowers rather than lending on its own. The website brings together both lenders and borrowers. Participants are onboarded into the platform and then can conduct transactions through it. A net owned fund of INR 2 crore is also required.
The NBFC Account Aggregator is a relatively new concept in the industry. NBFC Account Aggregator collects data from several users and distributes it to various financial institutions. An Account Aggregator’s responsibilities include supplying consumers with financial information that is aggregated and easily accessible. The NBFC Account Aggregator delivers accurate data.
Recent Ammendment:
As per a recent notification issued by RBI on October 22, 2021; – Regulatory minimum Net Owned Fund (NOF) for NBFC-ICC, NBFC-MFI and NBFC-Factors shall be increased to from ₹2 crore to ₹10 crore
Which entities in India are not NBFCs?
- Agriculture activity
- Industrial activity
- The purchase and sale of any items
- Purchase/sale/construction of an Immovable property
Advantages of NBFC Registration in India
- Diverse Financial Solutions: Offers loans, portfolio management, and trading in money market instruments.
- Higher Profitability: Lower investment requirements make NBFCs more profitable than traditional banks.
- Simpler Registration: Faster, less complex, and more cost-effective registration process than obtaining a traditional bank license.
- Quick Loan Processing: Faster loan processing and disbursal due to fewer regulatory constraints.
- Flexible Loan Approvals: Loans can be approved without relying on CIBIL or credit scores.
- Easy Loan Recovery: Swift loan recovery options through asset attachment, foreclosure, or repossession.
- High Growth Potential: Expected to maintain an 18.5% CAGR between 2021 and 2026.
- Easier Setup: Simpler to register than as a small bank, primarily serving small borrowers.
Simplifying NBFC registration
Registration Requirements:
- Company Structure: The applicant must be a registered entity under the Companies Act of 1956 or 2013.
- Director Expertise: At least one-third of the directors must have prior experience in the financial industry.
- Business Plan: A comprehensive five-year business plan is required.
- Minimum Net Owned Funds (NOF): The applying company must maintain a NOF of at least INR 2 crore, with applicable taxes paid.
- Capital Quality: RBI will assess capital quality to ensure compliance with legal standards.
- Creditworthiness: The company, its directors, and shareholders must have good credit with no history of intentional loan defaults to banks or NBFCs.
- FEMA Compliance: If foreign investment is made, the company must comply with FEMA regulations. Foreign Direct Investment (FDI) is permitted from FATF-compliant countries.
Registration Process
- Register Under the Companies Act: Begin by registering your business as per the Companies Act, 1956/2013.
- Ensure Minimum NOF: Maintain the required NOF according to your NBFC type.
- Application Form: Complete and submit the application form on the RBI’s official website.
- Document Submission: Attach the necessary documents along with your application
- CARN Number: Upon submission, a CARN number will be issued to track the application status.
- Submit to RBI Regional Office: Send the application form to the RBI’s regional office.
- Approval: Registration is granted if all regulatory requirements are met.
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Checklist of Documents Required for NBFC Registration
- Certified copies of the company’s COI, MOA, and AOA
- Net worth certificate of Directors, Shareholders & Company
- Certificates of education for the suggested directors
- Highest experience certificates
- Business profile of directors and shareholders
- Credit report of directors & shareholders
- KYC information, the company’s PAN, its GST number, and its address documentation
- Company bank account details [Rs. 2 Cr. must have been placed as NOF]
- Balance sheet that has been audited over the past three years or since incorporation
- Disclosures by Related Parties
- Income tax Returns
- No lien exists on the fixed deposit, according to a banker’s report
- Board resolution format for NBFC registration
- A detailed action plan for the next five years that includes a risk assessment policy and a fair practices code
- Business Structure & Loan Structure
- IT Policy
Our NBFC Registration Solutions
Comprehensive Guidance:
Our team of experienced professionals will provide you with end-to-end assistance, ensuring a smooth and compliant NBFC registration in India.
Documentation and Preparation:
Our team will assist you in gathering and organizing all the necessary documents required for the registration process, ensuring that you are fully prepared to submit an online application for NBFC. Later, our team will assist you in responding to RBI queries and objections.
Regulatory Compliance:
We will guide you through the various regulatory steps, ensuring that your NBFC complies with all relevant RBI master directions, RBI guidelines, and regulations are up to date. A highly experienced team and a minimum of Rs. 10 crores net-owned fund are required as a fixed deposit while applying for Nbfc registration with RBI.
Application Submission:
With our expert assistance, your NBFC registration COR application will be prepared and submitted to the Reserve Bank of India.
Dedicated Support:
Throughout the process, you'll have a dedicated support team to address your queries and keep you informed at every stage.
NBFC Advisory - Your Trusted Partner for Regulatory Excellence
Welcome to NBFC Advisory, where we offer tailored services for Non-Banking Financial Companies and regulatory compliance with RBI.
Our team of industry experts provides
Licensing and Registration Support
Regulatory Compliance
Strategic Advising,
Risk Management Strategies
Financial Services
Let us empower your NBFC business in India with the knowledge and tools for success. NBFC Advisory is your dedicated partner on the journey to NBFC excellence. We will help you navigate the complexities of the financial industry while ensuring compliance and sustainable growth
Why NBFC Advisory?
We know NBFC registration can be complex, so our team of seasoned experts is here to support you at every step.
- Swift, Streamlined Process: Experience a faster, more efficient registration journey with automated document submission and coordinated support from government agencies.
- Industry Insights and Expertise: Leverage our knowledge to gain insights on best practices and stay updated on emerging regulatory changes.
- Tailored Solutions: Every business is unique; we personalize our registration support to fit your specific requirements.
- Commitment to Excellence: Trust NBFC Advisory’s dedicated professionals to handle the complexities of NBFC registration, offering you confidence and peace of mind.
- Growth-Oriented Approach: With our team handling your registration, you can concentrate on growing your business. We offer tailored guidance and ongoing support every step of the way.
Before NBFC Advisory
- Struggling with the company registration
- Confused with complex regulatory requirements
- Tedious approval processes
- Legal incompetency and heavy penalties
- Multiple steps
After NBFC Advisory
- Smooth, hassle-free registration
- Expert guidance to clarify regulations
- Direct communication with regulatory bodies
- Legal experts by your side
- Timely readiness, well ahead of deadlines
Get started and register your NBFC successfully!
Our mission is to Make it Count. Don’t let the challenges of NBFC registration hold you back. With NBFC Advisory by your side, you can focus on building your future while we handle the details, empowering your business to reach new heights!
Simplifying Regulations, Empowering Growth
Get started on your NBFC registration right now!!
Get started on your NBFC registration right now!!
FAQs
NBFCs (Non-Banking Financial Companies) are financial entities that engage in lending and accepting deposits from the public without requiring a full banking license.
There are majorly two types of NBFC.
- Deposit-Taking NBFC: NBFCs are allowed to take deposits from the public, lend through the public, and own funds like Bajaj Finance.
- Non-Deposit-Taking NBFC: These NBFC companies in India do not accept deposits and operate solely using their own funds, such as Parfait Finance and Investment Private Limited and Davinta Finserv Private Limited.
To register for an NBFC in India, you need to go through the NBFC registration process by submitting an application to the RBI. The RBI will consider several NBFC registration criterias before issuing a license, including:
- Composition of the board of directors
- Verified source of capital to invest in the NBFC business in India
- No promoters or associated person shall be convicted of CIVIL and Criminal offenses, including section 138 of the Negotiable Instrument Act.
Yes, to lend money at the pan-India Level, you must have either a banking license or a Non-Banking finance Company license from RBI.
| S.No. | Nature | Count |
| 1. | NBFC Accepting Deposit | 558 |
| 2. | NBFC Not Accepting Deposit | 9446 |
| S.No. | Activities | Count |
| 1 | NBFC- MFI | 97 |
| 2 | NBFC – Infrastructure Debt fund | 3 |
| 3 | NBFC- Factor | 8 |
| 4 | NBFC- Core Investment company | 59 |
| 5 | NBFC- Assets Finance Company | 278 |
| 6 | NBFC- Infrastructure Finance company | 9 |
| 7 | NBFC -P2P Lending | 25 |
| 8 | NBFC – ARC | 29 |
| 9 | NBFC-ICC | 9346 |
| 10 | NBFC Assets Size 100 crore and above | 946 |
| 11 | NBFC-Account Aggregator | 5 |
| 12 | NBFC – Non operating financial holding company | 3 |
The minimum capital requirement to register the NBFC is 10 crore or more; however, if the existing NBFC holds a valid license before 22nd Oct 2021, it must maintain the NOF 5 crore by March 2025 and 10 crore by March 2027. However, for NBFC-P2P, NBFC-AA, and NBFCs with no public funds and no customer interface, the NOF shall continue to be ₹ 2 crores. It is clarified that there is no change in the existing regulatory minimum NOF for NBFCs – IDF, IFC, MGCs, HFC, and SPD.
After registration, we offer ongoing support that includes:
- Regular compliance monitoring and updates on regulatory changes.
- Assistance with financial reporting and audits.
- Advisory services for strategic growth, helping your fintech startup in India navigate the complexities of the industry and scale successfully.
