NBFC registration in India follows a set order. First, test whether the activity meets the RBI’s principal business test. Next, identify the NBFC category, set up the Indian company and bring in the required capital, which is INR 10 crore for a general NBFC. Then apply to the RBI through its portal and wait for the Certificate of Registration. Lending starts only after that. Foreign groups should check FDI, FEMA and tax treatment early, since these shape the structure.
A foreign finance business can have an Indian company incorporated, funded and ready on paper, yet still not be able to start lending. Incorporation and regulatory permission are separate matters. For a business planning to provide loans or other regulatory finance services, NBFC registration in India has to be considered before the operating model is finalised.
In 2026, RBI introduced a limited exemption for certain NBFCs that do not use public funds and have no customer interface. A business that plans to lend to customers will be outside that exemption. For a foreign group there are certain decisions that must be kept in mind. These include defining the activity, determining the regulatory category, setting up the Indian entity, bringing in the required capital, completing the relevant approvals and then beginning regulated lending. Getting these decisions in the right order determines whether the proposed structure is ready to operate or needs regulatory approval.
What is NBFC and When Does RBI Registration Apply?
An NBFC is a company that primarily carries on financial activities and deals in loans, advances, or certain investment activities. The RBI supervises these companies under Chapter III-B of the Reserve Bank of India Act, 1934 and regulates them.
RBI decides whether a company is an NBFC by looking at its ‘principal business’. RBI measures it through the 50-50 test. Take a company holding INR 10 crore in total assets, after deducting intangible assets. If more than INR 5 crore sits in financial assets, the first condition is met. The second condition asks whether more than half of its gross income comes from those assets.
Section 45-IA is the legal basis of registration. A memorandum that permits lending does not replace the Certificate of Registration, and the RBI has made it clear that operating without one, where required, can lead to penal action.
Certain entities regulated under other laws are exempt. Therefore, it is important to analyse the business activity.
Which NBFC Categories Are Relevant to Lending and Finance Businesses?
The RBI’s current framework keeps in check NBFC work in more than one way. Some factors that affect NBFC work are the nature of activity, the type of liabilities and scale-based regulatory layer. The scale of NBFC has a significant impact on level of regulations that is applied to it.
| NBFC category | Broad activity | Regulatory relevance |
|---|---|---|
| NBFC-ICC | Loans, asset finance and specified investment activity | Common category for a general lending business |
| NBFC-MFI | Microfinance | Subject to specific microfinance requirements |
| NBFC-Factor | Factoring | Applies to receivables financing activity |
| NBFC-IFC | Infrastructure finance | Has specialised infrastructure lending requirements |
| IDF-NBFC | Infrastructure debt financing | Subject to a separate infrastructure framework |
| NBFC-P2P | Peer-to-peer lending platform | Connects lenders and borrowers rather than lending from its own balance sheet |
Under the scale-based framework, NBFCs are placed into Base, Middle, Upper and Top Layers. The regulatory requirements increase as the level moves up.
The 2026 amendments introduced Type I and Type II NBFCs. A Type I NBFC does not avail public funds and does not have customer interface. Certain Type I entities with assets below INR 1000 crore fall within the new exemption, subject to the rules. A company that intends to lend to customers falls under the Type II category.
A Type II NBFC has public funds or customer interface or both. They remain subject to the applicable RBI registration and regulation requirements.
What are the Key Eligibility Requirements for NBFC Registration in India?
The RBI looks at more than the amount of capital sitting in the bank account. They also note if the proposed entity can operate as a regulated finance company. The main areas include:
- Indian Company: The applicant needs to be incorporated under the Companies Act.
- Net Owned Funds: For the general NBFC framework, the minimum requirement is INR 10 crore. Net Owned Fund (NOF) refers to the eligible owned capital remaining after applying the deductions specified by the RBI. It is a regulatory capital requirement, not a registration fee.
- Board and Management: Directors and senior management have a significant impact on the RBI’s assessment of the proposed business.
- Business Plan: The proposed lending products, target borrowers, source of funds and financial projections should be clearly worked out.
- Controls: The company needs appropriate arrangements for risk management, compliance and internal oversight.
The NBFC registration requirements vary according to the category. For example, an NBFC-ICC should not be assessed using the same assumption as a specialised infrastructure or microfinance entity.
What are the Essential Checks Before Establishing an NBFC in India?
For an overseas group, the RBI application is only one part of the structure. The Indian company must also fit within the foreign investment and foreign exchange framework.
Foreign Investment and RBI Approvals
Foreign investment in NBFC activities is governed by the applicable FDI policy and FEMA rules, alongside the regulations of the financial sector regulator. The ownership structure, investor eligibility, pricing, reporting, reporting and nature of the proposed financial activity all needs to be reviewed.
Foreign investment rules answer the questions of whether the overseas investor can hold the proposed interest in the Indian company. RBI registration serves a different purpose. It determines whether the Indian company is authorised to conduct regulated NBFC activities.
Funding the Indian NBFC
The foreign parent provides capital to the Indian entity, but the route used for that funding plays an important role. Equity, shareholder loans and other forms of cross-border funding trigger different FEMA and tax rules.
Management services, technology charges, interest, guarantees and other related-party transaction create transfer-pricing and withholding-tax issues. These arrangements are usually easier to deal with before the operating model is fixed.
For a foreign group, NBFC registration in India involves more than submitting documents to the RBI. The ownership structure, directors, source of funds and cross-border movement of money must all be properly aligned and consistent.
What are the Documents Required for NBFC Registration?
The RBI provides an NBFC registration form and related documents through its official portal. The supporting documents vary according to the category and the applicant’s circumstances. Here are some of the typical materials required:
| Area | Typical material |
|---|---|
| Corporate records | Incorporation documents and constitutional records |
| Ownership | Shareholding, promoters and source of capital |
| Directors | Identity, background and experience |
| Business model | Products, borrowers, funding and operating plan |
| Financial information | Capital details and projected financial statements |
| Governance | Internal controls, policies and oversight arrangements |
| Declarations | Undertakings, certificates and other RBI-prescribed statements |
These are useful categories for preparing the file. RBI can ask for additional information during its review.
NBFC Registration Process Through RBI
The process of NBFC registration involves several steps, from assessing the proposed financial activity to obtaining approvals from RBI. The process generally starts with mapping the proposed activity against the regulatory definition and the principal business test. The company structure and memorandum objects can then be aligned with that activity. The promoters need to determine the relevant NBFC category, put the required capital in place and prepare the business and financial information.
The registration application is submitted through the RBI’s prescribed mechanism, with the RBI’s current NBFC forms directing applicants to the PRAVAAH portal.
The RBI then examines the application and asks for further information or clarification. If the requirements are met and the RBI is satisfied with the application, it may issue the Certification of Registration for NBFC. The company should only begin the regulated lending activity after the required authorisation has been obtained.
What Happens After the RBI Certificate is Granted?
Obtaining an NBFC licence in India is only the beginning of the company’s regulated life. The exact obligation depends on the entity’s category and scale, but they can include regulatory returns, capital and prudential requirements, financial reporting, governance standards, customer protection and KYC and AML requirements. The RBI’s framework applies these rules according to the nature and regulatory position of the NBFC.
There is a chance that the position might change after registration. A new business line, a change in ownership or control, a management change or a different funding arrangement may require another regulatory review. The licence is not a blanket approval for any future financial activity.
How is the Cost of NBFC Registration Determined?
There is no single cost figure for establishing an NBFC. The amount needed depends heavily on the proposed business.
A foreign group may incur costs for company incorporation, regulatory capital, legal documentation, governance arrangements, risk systems, lending technology, KYC processes, audit, reporting and tax and foreign exchange work.
For a general NBFC applicant, the current minimum NOF is INR 10 crore. That money remains part of the company’s qualifying capital. It is not a fee paid to obtain the NBFC licence from RBI.
A proper cost assessment should come after the business model, ownership structure, NBFC category and compliance requirements have been settled.
Conclusion
NBFC registration in India is closely tied to the way the business is structured. For a foreign group, the lending model, Indian company, ownership, capital, foreign investment position, funding arrangements and tax treatment all need to fit with the RBI requirements. The 2026 exemption for certain entities without public funds and customer interface has narrowed the position for a specific group. However, it does not remove the normal registration requirement for a customer-facing lender.
The distinction between incorporation and RBI authorisation should be settled before the business starts spending on its operating structure. Getting that wrong can affect the company’s capital planning, ownership arrangements and launch timetable.
Foreign businesses assessing NBFC registration in India can get in touch with the professionals at Stratrich for support with the regulatory, tax and compliance aspect of setting up an Indian operation.
Frequently Asked Questions (FAQs)
Yes, RBI registration is mandatory for a company intending to carry on NBFC business in India. However, certain categories of entities may be exempt under specific RBI provisions
A foreign group can establish an Indian company with foreign investment, subject to the applicable FDI and FEMA rules. The Indian entity must then satisfy the RBI requirements for the proposed financial activity. The foreign investor’s ability to own shares in the company does not itself create an NBFC registration or permit regulated lending. RBI authorisation remains a separate requirement where the business falls within the regulated framework.
For a company seeking registration under the general NBFC framework, the RBI states a minimum Net Owned Fund of INR 10 crore, and new applicants are required to have that amount from the outset. Certain specialised categories have different thresholds. The applicable capital requirement should be checked after identifying the proposed NBFC category rather than assuming that one figure applies to every business.
There is no fixed timeline prescribed by the RBI for every NBFC registration application. The time required depends on the completeness of the application, the company’s ownership structure, the background of its promoters and directors, and any additional information or clarification sought by the RBI. Application involving foreign shareholders face further scrutiny.
No. Incorporation only creates the Indian legal entity. Where the proposed activity requires RBI registration, the company must obtain the required RBI Certificate of Registration before commencing that regulated business. The RBI’s own guidance states that a company required to register cannot commence or carry on the relevant non-banking financial business without the certificate.
