NBFC Registration with RBI — Categories, Requirements and Compliance

A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act that engages in financial business — lending, investment, hire purchase, insurance business etc. — but does not hold a banking licence. NBFCs must obtain a Certificate of Registration (CoR) from the Reserve Bank of India (RBI) before commencing financial business. Here is the complete guide.

Types of NBFCs

• NBFC-ICC (Investment and Credit Company): Engaged in lending, investing in securities — most common type
• NBFC-MFI (Microfinance Institution): Providing small loans to low-income borrowers
• NBFC-Factor: Engaged in factoring (purchasing receivables)
• NBFC-P2P (Peer-to-Peer Lending): Online platform for peer lending
• NBFC-AA (Account Aggregator): Collecting and sharing financial data with consent
• Mortgage Guarantee Company, Infrastructure Finance Company, Housing Finance Company (HFCs are now regulated by NHB)

Minimum Capital Requirements

• Minimum Net Owned Fund (NOF): ₹10 crore for NBFC-ICC (general lending)
• NOF = Owned Funds (paid-up equity + reserves) minus investments in subsidiaries + accumulated losses
• The ₹10 crore must be in a fixed deposit (FD) with a scheduled commercial bank — FD receipt to be submitted with the application
• Different minimum capital requirements for specialised NBFCs (NBFC-MFI, P2P, etc.)

NBFC Registration Process

• Incorporate the company under Companies Act 2013 with an appropriate object clause for financial business
• Open bank account and deposit NOF in FD
• Apply online through the COSMOS Portal (RBI's portal for NBFC registration)
• Submit documents: Company MOA/AOA, COI, board resolution, audited financials, business plan, KYC of directors, CIBIL reports, FD receipt, CA-certified NOF certificate
• RBI scrutinises application and may seek clarifications — process typically takes 3-6 months
• RBI grants Certificate of Registration — company can then commence NBFC business

Ongoing NBFC Compliance

• File NBS-1, NBS-2 returns with RBI (quarterly/annually depending on size)
• Maintain CRAR (Capital to Risk-weighted Assets Ratio) — minimum 15%
• Fair Practice Code and Know Your Customer (KYC) compliance
• Credit concentration norms — lending limits to single/group borrowers

Conclusion

NBFC registration with RBI is a rigorous process requiring adequate capital, a sound business plan and full regulatory compliance — with heavy ongoing supervision after registration. SPOTON provides NBFC registration advisory, RBI application preparation and ongoing compliance support for NBFC promoters in Kerala. Contact us for expert NBFC regulatory services.