How to Register as an NBFC with the RBI in India: Eligibility, Application, and Compliance

A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 2013, that engages in the business of loans and advances, acquisition of shares, stocks, bonds, debentures, or securities, leasing, hire-purchase, insurance, or chit fund activities. Unlike banks, NBFCs cannot accept demand deposits, but they play a critical role in India's financial ecosystem by serving segments that traditional banks often do not reach. Any company wishing to carry on the business of a non-banking financial institution must obtain a Certificate of Registration (CoR) from the Reserve Bank of India (RBI) under Section 45-IA of the RBI Act, 1934. This guide explains the complete registration process.

Eligibility Criteria

To be eligible for NBFC registration, the applicant must meet the following requirements. The entity must be a company registered under the Companies Act, 2013 (a partnership firm, proprietorship, or LLP cannot register as an NBFC). The company must have a minimum Net Owned Fund (NOF) of Rs 10 crore. The NOF is calculated as the paid-up equity capital plus free reserves, minus accumulated losses, deferred revenue expenditure, and intangible assets. The NOF must be unencumbered and verifiable through audited financial statements.

Additionally, at least 50% of the company's total assets must be financial assets (loans, investments, receivables from financial activity), and at least 50% of the company's gross income must be derived from financial activity. The directors of the company must have relevant experience in financial services, banking, or related fields, and must have a clean credit history with no defaults or adverse records with CIBIL or other credit information companies. The company must not have been convicted of any economic offence.

New Exemption from July 2026

From July 1, 2026, the RBI has introduced a new category called Unregistered Type I NBFC. An NBFC that does not access public funds, does not have a customer interface, and has an asset size below Rs 1,000 crore may qualify for exemption from the registration requirement. However, if your company intends to access public funds (including bank borrowings), deal directly with retail customers, or grow beyond Rs 1,000 crore in assets, registration remains mandatory.

Application Process Through COSMOS

The RBI processes all new NBFC registration applications through its COSMOS (Companies Online Submission and Monitoring System) portal. Step 1: Visit the RBI COSMOS portal and register your company by providing the CIN (Corporate Identity Number), company name, and authorised signatory details. Step 2: Log in and navigate to the NBFC registration application section. Fill in the online application form with details of the company's incorporation, directors, shareholders, financial statements, business plan, proposed activities, and compliance infrastructure.

Step 3: Upload the required documents, which include the certificate of incorporation, memorandum and articles of association, audited financial statements for the last three years (or since incorporation if less than three years), board resolution authorising the application, details of directors including DIN, PAN, qualification, experience, and net worth statements, a detailed business plan covering target market, products, funding sources, and growth projections, KYC and anti-money laundering policies, and a fair practices code for lending activities.

Step 4: Submit the application through COSMOS and also send a physical copy of the application with all supporting documents to the regional office of the RBI under whose jurisdiction the company's registered office falls. Step 5: The RBI will scrutinise the application, may seek additional information or clarifications, and may call the promoters for a personal interview. If satisfied, the RBI will grant the Certificate of Registration.

Timeline

The entire registration process typically takes 3 to 6 months from the date of submission, provided all documentation is complete and no major objections are raised. The RBI may take longer if the business plan raises concerns, if the directors' background checks reveal issues, or if additional information is required. Applicants should ensure that the NOF of Rs 10 crore is fully paid up and reflected in the audited financials before applying, as this is the most common reason for application delays.

Post-Registration Compliance

Once registered, NBFCs must comply with a comprehensive set of RBI regulations, including maintaining the minimum NOF at all times, adhering to prudential norms on income recognition, asset classification, and provisioning, filing quarterly and annual returns with the RBI through the COSMOS portal, maintaining a statutory liquidity ratio as prescribed, following fair practices codes for lending and recovery, implementing KYC and AML/CFT guidelines, appointing a compliance officer, and submitting to RBI inspections and audits.

NBFCs are also classified into different categories based on their size (NBFC-BL, NBFC-ML, NBFC-UL) with progressively stricter regulatory requirements as the asset size increases. The Scale Based Regulation framework introduced by the RBI in 2023 applies four layers of regulation: Base Layer for NBFCs with assets below Rs 1,000 crore, Middle Layer for those between Rs 1,000 crore and Rs 10,000 crore, Upper Layer for those above Rs 10,000 crore, and Top Layer for NBFCs identified as systemically significant.

Key Considerations

Before applying for NBFC registration, promoters should carefully evaluate whether the NBFC structure is the right vehicle for their business model, as the regulatory compliance burden is substantial. Alternative structures such as a Section 8 microfinance company, a fintech partnership model, or a peer-to-peer lending platform registered with the RBI may be more appropriate depending on the business plan. Consulting with a chartered accountant and a legal advisor experienced in financial sector regulation is strongly recommended before initiating the application process.