NBFC Company Incorporation

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NBFC Company Registration

NBFC stands for Non-Banking Financial Company. NBFC, in simple words, means a Company which is engaged in the business of accepting deposits as its principal business activity. An NBFC is a company registered under the Companies Act 1956 or Companies Act 2013 which is engaged in the business of financial institution i.e it 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, leasing, hire-purchase, insurance business, chit business but does not include any institutions which carry on its principal business as agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing of any services or purchase, construction or sale of immovable properties.

NBFC’s are the mobilizers of savings of the household sector and the corporate sector has to channelize the same into productive activities of the manufacturing industry and the services sector. Although in India, the NBFCs have been around since many decades, still their growth really started off in the 1990’s and now it is governed with lot of regulations. The Government of India and Reserve Bank of India took various initiatives so as to promote easy availability of finance to public. The Reserve Bank of India has framed certain rules and regulations for NBFC’s for protecting the interest of the depositors.

As per Section 45-1A of the RBI Act,1934, NBFCs are required to obtain a Certificate of Registration (CoR) from the Reserve Bank of India to commence/carry on business of NBFI in terms of Section 45-1A of the RBI Act,1934. The said section also prescribes the minimum Net Owned Fund (NOF) requirement to be fulfilled by the Companies applying for NBFC License to commence business.


To be registered as NBFC, the company has to fulfill the following criteria (both the conditions together) for determining the principality of business:

The term “principal business” is not defined by the Reserve Bank of India Act. The Reserve Bank has defined it so as to ensure that only companies predominantly engaged in financial activity get registered with it and are regulated and supervised by it. This test is popularly known as 50-50 Test and is applied to determine whether or not a company is into financial business.

Documents Required for NBFC Company Registration

One must keep the following documents ready to obtain NBFC License from RBI. Following are the broad list of documents:

  • iconCertified Copies of Certificate of Incorporation of the Company
  • iconCertified Copies of Memorandum and Articles of Association of the Company. Extract of MOA containing clauses relating to financial business activity.
  • iconDetails of the Management of the Company
  • iconCertified copy of PAN Allotted to the Company
  • iconCertified copy of Board Resolution stating that the company is not carrying on any NBFC activity/stopped NBFC activity and will not carry on/commence the same before getting registration from RBI
  • iconCertified copy of Board Resolution for formulation of Fair Practices Code as per RBI Guidelines
  • iconCertified copy of Board Resolution to the effect that the company has not accepted public funds in the past/does not hold any public fund as on the date and will not accept the same in the future without the approval of Reserve Bank of India
  • iconCertified copy of Board Resolution stating the Unincorporated Bodies in the group where the director holds substantial interest or otherwise has not accepted any public deposit in the past /does not hold any public deposit as on the date and will not accept the same in future
  • iconCopy of Fixed Deposit receipt & Bankers certificate of no lien indicating balances in support of Net Owned Fund
  • iconBrief profile of the Directors of the Company and signed by each Director
  • iconCIBIL Data pertaining to Directors of the Company
  • iconDetails of Authorised Share Capital and latest shareholding pattern of the company including the percentages.
  • iconDetails of the bank balances/bank accounts/complete postal address of the branch/bank loan/credit facilities etc. availed
  • iconSelf-attested Bank Statement/IT Returns etc.
  • iconSource of the startup capital of the company substantiated with documentary evidence
  • iconStatutory Auditors Certificate certifying that the Company is/does not accept/is not holding Public Deposit/is not carrying on any NBFC activity/Net Owned Fund as on the date of application
  • iconLast three years Audited Balance Sheet and Profit & Loss account along with directors & auditors report or for such shorter period as are available (for companies already in existence.
  • iconBusiness plan of the company for the next three years giving details of its (a) thrust of business, (b) market segment, and (c) projected balance sheets, cash flow statement, asset/income pattern statement without any element of public deposits.
  • iconBanker’s report in respect of applicant company, its group/subsidiary/associate/holding company/related parties, directors of the applicant company having substantial interest in other companies. The Banker’s report should be about the dealings of these entities with these bankers as a depositing entity or a borrowing entity.
  • iconNote: Please provide bankers report from all the bankers of each of these entities and provide the report for all the entities. The details of deposits and loans balances as on the date of application and the conduct of the account should be specified.
  • iconAny other documents as may be required by RBI

Legal Procedures for NBFC Company Registration

Sr. No





The first step is to form a New Company registered under the Companies Act 2013. The name must reflect the character of an NBFC. Words such as Finance, Investment, Finvest, Finstock, etc. may be used as part of the name. In general, RBI does not allow names that do not reflect the characteristics of NBFC.



The requirement of Minimum Net Owned Fund has been increased from Rs 2 Crores to Rs 10 Crores (Vide RBI Circular DOR.CRE.REC.No.60/03.10.001/2021-22 dated 22nd October 2021. It must be ensured that the Authorised Capital of the NBFC is not less than Rupees Ten Crores.

After the incorporation of a new Company, the Paid-up Equity Capital of the Company should suitably rise either at par or premium so as to attain a minimum Net Owned Fund. The Capital to be raised here should be Equity Share Capital and not Preference Share Capital. RBI vide its Notification dated 22nd October 2021, has brought changes in the regulatory minimum net owned fund (which shall be effective from 01st October 2022)


Current NOF

By March 31, 2025

By March 31, 2027


₹2 crore

₹5 crore

₹10 crore


₹5 crores (₹2 crores in NE Region)

₹7 crores (₹5 crores in NE Region)            

₹10 crore


₹5 crore

₹7 crore

₹10 crore


But for NBFC-P2P, NBFC-AA, and NBFCs with no public funds and no customer interface, the NOF shall continue to be ₹2 crore. Also there is no change in the existing regulatory minimum NOF for NBFCs - IDF, IFC, MGCs, HFC, and SPD.

The Net Owned Funds would be calculated based on the last audited balance sheet of the Company. Net owned Fund will consist of paid up equity capital, free reserves, balance in share premium account and capital reserves representing surplus arising out of sale proceeds of assets but not reserves created by revaluation of assets. From the aggregate of items will be deducted accumulated loss balance and book value of intangible assets, if any, to arrive at owned funds. Further, investments in shares of other NBFCs and in shares, debentures of subsidiaries and group companies in excess of ten percent of the owned fund mentioned above will be deducted to arrive at the Net Owned Fund.



The entire sum of Rs 2 crores should be kept in a bank in a Deposit Account free from all liens. Normally funds are kept in Fixed Deposit. The RBI at the time of considering the application for the grant of Certificate of Registration verifies the deposits held by the Company with the Bankers.



a)     The applicant Company is required to apply online and submit a physical copy of the application along with the necessary documents to the Regional Office of the Reserve Bank of India. The application can be submitted online by accessing RBI’s secured website https://cosmos.rbi.org.in. At this stage, the applicant company will not need to log on to the COSMOS Application and hence user ids are not required.

b)     The company can click on “CLICK” for Company Registration on the login page of the COSMOS Application. A window showing the Excel application form available for download would be displayed.

c)      The company can then download suitable application form (i.e. NBFC or SC/RC) from the above website, key in the data and upload the application form.

d)     The company may note to indicate the correct name of the Regional Office in the field “C-8” of the “Annex-Identification Particulars” in the Excel application form.

e)     The company would then get a Company Application Reference Number for the CoR application filed on-line. Thereafter, the company has to submit the hard copy of the application form (indicating the online Company Application Reference Number) along with the supporting documents, to the concerned Regional Office. The company can then check the status of the application from the above mentioned secure address, by keying in the acknowledgement number.



In addition to the documents required to be enclosed along with Application Form, the following should also be enclosed:

a)     Copy of E-Form Spice 32

b)     Experience Certificate or Details of Experience of Directors, if any, in NBFC Business

c)      Banker’s Report in the format prescribed by RBI with the request to Bank that original should be directly sent to RBI

d)     Banker’s Report of all the Firms/Company/Proprietorship Concern in which the director holds substantial interest

e)     Board Resolutions in the matter of Application for granting Certificate of Registration, Non-Acceptance of Public Deposits and Non carrying business of Non-Banking Financial Institution without Certificate of Registration.

f)       Board Resolution adopting a Fair Practices Code and a copy of the said Code.

g)     Declaration from Directors to give effect that they are not associated with unincorporated bodies u/s 45-S of RBI Act,1934

The application is to be filed with the Regional Office of RBI whose jurisdiction; the registered office of the Company falls.



After the same is filed, the same is examined by RBI and further documents and clarifications may be sought from time to time. Finally, if RBI considers that the application is complete in all respects and all required formalities and compliances are met, the RBI issues Certificate of Registration.

What are the Benefits of NBFC Company Registration?

NBFC Company Registration Certification (Medical Devices: Quality Management Standard) has many benefits:

  • iconNBFC grant loans at lower Interest Rates as compared to Banks
  • iconNBFC process Loan Applications quickly as compared to Banks
  • iconRules and regulations applicable to NBFCs are less stringent as compared to Banks
  • iconNBFC can grant loans to Individuals with Poor Credit Rating
  • iconNBFC cannot accept demand deposits
  • iconNBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself
  • iconNBFCs do not provide deposit insurance facility of Deposit Insurance & Credit Guarantee Corporation to depositors of NBFCs as in case of banks.