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Know More About NON-BANKING FINANCIAL COMPANY
Introduction and Its Compliance
An NBFC (Non-Banking Financial Company) is a company registered under the Companies Act, 2013 that is engaged in the business of loans and advances, acquisition of shares/ stocks/ bonds/ debentures/ securities issued by Government or local authority or other marketable securities of a like nature and more other like activities but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale, purchase or construction of immovable property. The company provides loans as well as asset financing, leasing, and investment in other financial products. Lawfinity provides comprehensive NBFC registration assistance, from organization structuring, application filing, pre-registration advisory to post-registration compliance.
Why It Is Needed
NBFC registration is necessary for any financial institution that wants to legally engage in lending, investment or financing activities without accepting demand deposits. It helps in maintaining the financial institution under the laws and regulations as defined by the RBI Affirmative in maintaining the bank under legal acts to operate in the financial system.
Benefits and Advantages
- Access to Financial Markets An NBFC structure enables businesses to offer lending and financing services, attract investments and participate in India’s growing financial inclusion initiatives.
- Increased Credibility RBI-registered NBFCs enjoy higher credibility and trust among investors, customers and banks, helping in securing funding and business partnerships.
- Diversified Product Offerings NBFCs can offer a wide range of financial services, including microfinance, gold loans, asset leasing, investment advisory and more.
- Flexible Operations Compared to banks, NBFCs operate with fewer compliance obligations on certain fronts, making them more agile and efficient in operations.
- Scalability With the right structure, NBFCs can scale across geographies, diversify portfolios and create niche financial products catering to underserved markets.
Eligibility Criteria
- Must be a company registered under the Companies Act, 2013
- Minimum Net Owned Fund (NOF) of ₹10 crores for NBFC-ICC (as per latest RBI guidelines)
- Directors and promoters must have a clean financial track record and relevant experience in finance
- Business must be involved in financial activities covering more than 50% of its total assets and income
- A well-structured business plan and KYC policy are mandatory
Documents Required
- Certificate of Incorporation of the Company
- MOA and AOA
- Board Resolution approving NBFC formation
- KYC documents of Directors and Shareholders
- Net worth certificate from a CA
- Bank account with ₹10 crore deposited (NOF proof)
- Business plan and financial projections
- Organizational structure and IT policy
- Auditor’s report and income proof
Steps for Applying
- Business Structuring: Lawfinity helps set up a Private or Public Company with the right object clause.
- Documentation: Preparation and collection of RBI-mandated documents, including NOF proof and business plan.
- Online Application: Filing the NBFC registration application on the RBI COSMOS portal.
- Background Checks: RBI conducts background verification and may request clarifications.
- Approval: Upon satisfaction, RBI grants the NBFC Certificate of Registration (CoR) under Section 45-IA of the RBI Act.
Penalties
- Unregistered Operations Operating as an NBFC without registration or failing to meet compliance post-registration can result in severe penalties, including cancellation of the certificate, monetary fines or imprisonment under the RBI Act.
- RBI Inspections RBI also has the power to inspect and audit NBFCs periodically.
Timelines
Overall Process Duration
The NBFC registration process typically takes 4 to 6 months
Timelines may vary depending on document verification and government approvals.
Fee
Frequently Asked Questions
Because every great business starts with the right answers.
Yes, if the company's financial assets and income from such assets constitute more than 50% of the total, RBI registration is mandatory.
NOF is the minimum capital of ₹10 crore that must be maintained by the company in a bank account to qualify for NBFC registration.
Only deposit-taking NBFCs (NBFC-D), with separate RBI approval, can accept public deposits.
Common types include NBFC-ICC, NBFC-MFI, NBFC-Factor, Infrastructure Finance Company (IFC) and NBFC-Housing Finance Company (NBFC-HFC).
Yes, but it is subject to ongoing compliance. RBI can cancel the license in case of violations.
Yes, up to 100% FDI is permitted under automatic route for most NBFC activities as per RBI guidelines.
Annual returns, statutory audits, board reporting, credit rating (if applicable) and regular submission of NBS returns.
Lawfinity handles company incorporation, RBI documentation, compliance checklists and complete process tracking till registration is granted.
Yes, with RBI’s approval and subject to fulfilment of additional eligibility criteria.
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Anil Yadav
Shaperz India Grain Private Limited
“From FSSAI to Trade License, Lawfinity handled all our approvals efficiently. One-stop solution for all licensing needs.”
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