NBFC Registration Services — RBI Certificate of Registration, NOF Requirements, and All NBFC Types

NBFC Registration Services

No person can commence or carry on the business of a Non-Banking Financial Company in India without first obtaining a Certificate of Registration (CoR) from the Reserve Bank of India under Section 45-IA of the Reserve Bank of India Act, 1934. This is the NBFC registration requirement that applies universally — regardless of whether the NBFC is a lending company, a microfinance institution, a peer-to-peer lending platform, a core investment company, or an asset reconstruction company. An entity carrying on NBFC business without a valid CoR commits an offence under Section 45-IA(2) and is liable to prosecution, fine, and winding up.

The NBFC registration process — obtaining the CoR from the RBI — involves incorporating a company under the Companies Act 2013, achieving the minimum Net Owned Fund (NOF) requirement, demonstrating compliance with the Principal Business Test, and filing a comprehensive application with the RBI's Regional Office. N D Savla & Associates provides end-to-end NBFC registration services in Mumbai, from pre-incorporation advisory (structure, minimum capital, director eligibility) through to the final issuance of the CoR and the first annual compliance filing post-NBFC registration.

For new NBFC-ICC applicants, the minimum NOF is ?10 crore (enhanced from ?2 crore for applications filed after April 2021). The NBFC registration application is filed online on the RBI's COSMOS portal and physical copies are submitted to the Regional Office of the Department of Regulation (DoR). For Mumbai-based NBFCs, the application goes to the RBI's Mumbai Regional Office. Our NBFC registration team prepares the application, business plan, director declarations, chartered accountant's certificate on NOF, and all supporting documents to ensure the NBFC registration application is complete and strong.

NBFC Types and Registration Requirements

The Principal Business Test — The Core NBFC Registration Criterion

The most critical criterion for NBFC registration is the Principal Business Test: to qualify as an NBFC, a company must have its principal business as financial activity. Under the Master Direction and DNBR's clarifications, the test is met when BOTH of the following conditions are satisfied:

• Financial assets constitute more than 50% of the company's total assets (net of intangible assets); AND
• Income from financial assets constitutes more than 50% of the company's gross income.

A company that fails either limb of this test is not an NBFC for regulatory purposes and cannot apply for NBFC registration. Conversely, a company that passes the Principal Business Test but has not obtained NBFC registration from the RBI is operating illegally as an unregistered NBFC under Section 45-IA.

Demonstrating compliance with the Principal Business Test at the time of NBFC registration application requires a detailed financial analysis and a CA certificate. For a startup entity applying for NBFC registration before it has commenced operations, the RBI accepts a projected business plan covering the next 5 years. The NBFC registration business plan is not a formality — the RBI reviews it for commercial viability, promoter experience, source of funds for the initial NOF, proposed product offerings, and risk management framework. A weak or template business plan is a common reason for NBFC registration applications to be delayed or rejected.

NBFC Registration Process — Step by Step

1. Company incorporation: incorporate a private limited company (for smaller NBFCs) or public limited company under the Companies Act 2013 via MCA; choose a name that does not conflict with existing NBFC names; ensure the memorandum of association includes the financial activities the NBFC intends to undertake.
2. NOF buildup: arrange paid-up equity share capital and free reserves (minus accumulated losses and intangible assets) to meet the minimum NOF threshold for the relevant NBFC type; NOF is computed per the RBI's prescribed formula and a CA certificate confirming NOF is mandatory for the NBFC registration application.
3. COSMOS portal application: create an account on the RBI's COSMOS portal and file the online NBFC registration application; upload scanned copies of all required documents including company incorporation certificate, MoA/AoA, audited balance sheet, bankers' certificate confirming NOF deposit, and director declarations.
4. Physical submission: submit signed physical copies of the NBFC registration application and documents to the RBI Regional Office in the region where the company's registered office is located; for Mumbai-registered companies, submit to the RBI Mumbai Regional Office, Byculla.
5. RBI scrutiny and queries: the RBI's Department of Regulation reviews the NBFC registration application; additional information or clarifications are common at this stage; respond promptly and accurately to all RBI queries to avoid delays.
6. In-principle approval (for some NBFC types): for NBFC-P2P, NBFC-AA, and NBFC-IFC, an in-principle approval is issued before the final NBFC license; for NBFC-ICC, the CoR is issued directly without a separate in-principle stage.
7. Certificate of Registration (CoR): on satisfaction, the RBI issues the CoR under Section 45-IA(2). The CoR specifies the NBFC type and any conditions. The NBFC may commence operations only after the CoR is received.

Director Fit and Proper Criteria for NBFC Registration

Every director, promoter, and key managerial person of the NBFC must satisfy the Fit and Proper Criteria prescribed by the RBI. For NBFC registration purposes, each director must provide a Fit and Proper declaration covering:

• No conviction for offences involving moral turpitude
• No wilful default with any bank or financial institution
• No disqualification under the Companies Act 2013 (Section 164)
• No bankruptcy or insolvency proceedings pending
• Adequate experience in the financial sector or related business (for NBFCs targeting specialised sectors)

The RBI conducts background checks on promoters and directors before issuing the NBFC license. Directors with adverse entries in RBI's database of defaulters (CRILC), CIC records, or MCA records are likely to result in NBFC registration rejection.

Frequently Asked Questions — NBFC Registration Services