Quick Answer
NBFC registration in India requires a minimum Net Owned Funds (NOF) of ₹10 crore, incorporation under the Companies Act, 2013, and a Certificate of Registration from RBI obtained through the COSMOS portal. Compliance obligations are tiered across four regulatory layers based on asset size and systemic risk, with digital lending rules adding a separate compliance track for technology-enabled lenders.
Registering and operating a Non-Banking Financial Company (NBFC) in India is a precise, document-intensive process governed by Section 45-IA of the Reserve Bank of India Act, 1934. Get it wrong or skip it entirely and the consequences range from RBI cancellation of registration to criminal prosecution under Section 58B of the RBI Act.
Altacit Global’s Banking and Finance practice advises fintech founders, lenders, and existing NBFCs on registration strategy, scale-based compliance, and digital lending obligations. This guide covers every step in sequence: who needs a licence, how to apply on the COSMOS portal, what compliance layer your NBFC falls into, and what filings are due and when.
For the broader framework including how NBFCs compare to banks, and how SARFAESI and IBC interact with NBFC lending refer to our Banking and Finance Law guide for businesses and lenders.
What Is an NBFC and Who Needs a Licence?
Under Section 45-IA of the Reserve Bank of India Act, 1934, no company can commence or carry on the business of a non-banking financial institution without obtaining a Certificate of Registration (CoR) from RBI. The definition is deliberately broad: any company that receives deposits or lends money as a business activity is potentially within scope.
The practical trigger is the 50-50 principal business test. RBI applies two concurrent criteria:
- Financial assets (loans, investments) constitute more than 50% of total assets.
- Income from financial assets constitutes more than 50% of gross income.
A company that satisfies both criteria in a given financial year is treated as an NBFC and must hold a valid CoR. This test catches holding companies, treasury-heavy corporates, and early-stage fintech startups that have begun lending operations without formalizing their regulatory status.
Critically, the test is applied to the company’s accounts not to its stated business purpose. A company registered as a “technology platform” that lends through its platform may still qualify as an NBFC if its financials meet the 50-50 threshold.
NBFC Registration Process: RBI COSMOS Portal, Step by Step
Step 1: Incorporate a Company Under the Companies Act, 2013
The applicant must be a company registered under the Companies Act, 2013. Partnerships, LLPs, and sole proprietorships are ineligible for NBFC registration. The company must have “finance” or a related term reflected in its objects clause in the Memorandum of Association.
Altacit Global’s corporate practice handles NBFC-specific incorporation, including drafting object clauses that satisfy RBI’s documentary requirements. For a full company incorporation guide, see our Company Registration article.
Step 2: Meet the Net Owned Funds (NOF) Requirement
The minimum NOF required for NBFC registration is ₹10 crore, as prescribed under RBI’s Master Directions on Non-Banking Financial Companies. NOF is calculated as paid-up equity capital plus free reserves, minus accumulated losses, deferred revenue expenditure, and other intangible assets.
Certain NBFC categories carry higher NOF thresholds:
NBFC Category | Minimum NOF |
NBFC (General) | ₹10 crore |
NBFC-MFI (Microfinance) | ₹10 crore (non-deposit taking) |
NBFC-Factor | ₹10 crore |
Infrastructure Finance Company (IFC) | ₹300 crore |
Core Investment Company (CIC) | ₹100 crore (if accessing public funds) |
The NOF must be held in liquid assets typically government securities or fixed deposits and evidenced by a statutory auditor’s certificate at the time of application.
Step 3: Prepare Documents
RBI requires the following documents at the time of COSMOS portal submission:
- Certified copy of the Certificate of Incorporation and Memorandum and Articles of Association
- Audited balance sheets and profit and loss accounts for the last three years (or from incorporation if less than three years old)
- Statutory auditor’s certificate confirming NOF of ₹10 crore or above
- Board resolution authorizing the application and confirming the company is not a bank, insurance company, or stock exchange
- Bankers’ report confirming the source of NOF funds
- KYC documents and fit-and-proper declarations for all directors
- CIBIL or credit bureau reports for the company and directors
- Business plan projecting the next three to five years of operations
Incomplete documentation is the most common cause of application delay. RBI’s scrutiny team will return the application if any of the above are missing or inconsistent.
Step 4: Apply on the COSMOS Portal
The COSMOS portal Company Registration Online System is RBI’s dedicated interface for NBFC registration applications. The portal is accessible at https://cosmos.rbi.org.in.
The application process on COSMOS involves:
- Create a company profile using the Corporate Identification Number (CIN).
- Complete the online application form (NBFC CoR form) with entity details, proposed business activity, and capital structure.
- Upload all documents in the prescribed format and file size limits.
- Submit the online application and note the Application Reference Number for tracking.
- Submit a physical copy of the application to the Regional Office of RBI with jurisdiction over the company’s registered office.
The Regional Office conducts the first level of scrutiny. Applications with deficiencies are returned via COSMOS with a query list. Applicants must respond within the stipulated period typically 30 days or the application is treated as abandoned.
Step 5: RBI Scrutiny and Certificate of Registration
Following Regional Office scrutiny, the application is referred to RBI’s Central Office (Department of Regulation) for final review. RBI examines the business plan, the directors’ background, the source of funds, and the company’s projected compliance readiness.
If satisfied, RBI issues the Certificate of Registration specifying the NBFC category (e.g., NBFC-ICC, NBFC-MFI) and any conditions attached to registration. The CoR must be displayed at the registered office and every branch.
Total time from COSMOS submission to CoR issuance currently ranges from 90 to 180 days, depending on application completeness and RBI’s query cycle. Altacit Global advises applicants to treat the pre-application documentation phase as the most time-critical; a clean, complete first submission is the fastest route to CoR.
Scale-Based Regulatory Layers: Compliance by Category
RBI’s Scale-Based Regulation (SBR) framework, introduced in 2023 and updated through 2025, divides all registered NBFCs into four layers. The layer determines the NBFC’s capital adequacy requirements, governance standards, board composition, and disclosure obligations.
Layer | Who It Covers | Key Compliance Features |
Base Layer (NBFC-BL) | NBFCs with assets below ₹1,000 crore; non-deposit taking; no systemic significance | Simplified NBS returns; no mandatory board Risk and Compliance Committee; lighter disclosure |
Middle Layer (NBFC-ML) | NBFCs with assets of ₹1,000 crore+; all deposit-taking NBFCs; IFCs; standalone primary dealers | Mandatory Internal Audit function; board Risk and Compliance Committee required; enhanced capital adequacy norms; mandatory board-approved Fair Practices Code |
Upper Layer (NBFC-UL) | NBFCs identified by RBI annually based on a scoring model; list published each September | Near-bank-equivalent regulation; mandatory listing within three years of UL classification; Internal Capital Adequacy Assessment Process (ICAAP); group-level reporting; enhanced public disclosures |
Top Layer (NBFC-TL) | Reserved for NBFCs posing extreme systemic risk | Maximum regulatory intensity; as of 2026, no NBFC has been classified at this layer |
RBI classifies NBFCs into the Upper Layer using a scoring model that weights asset size (most heavily), interconnectedness, complexity of activities, and nature of liabilities. An NBFC classified as Upper Layer receives written notice and a 12-month transition period before enhanced compliance obligations apply.
The compliance shift from Middle Layer to Upper Layer is the most consequential reclassification an NBFC can experience. Altacit Global works with Middle Layer NBFCs approaching the Upper Layer threshold to audit compliance readiness before RBI’s annual classification exercise.
Fair Practices Code: Mandatory Borrower Protections
Every NBFC regardless of layer must maintain a board-approved Fair Practices Code (FPC) in line with RBI’s Master Directions on Fair Practices Code for NBFCs. The FPC must be published on the NBFC’s website and made available to borrowers on request.
The FPC must address the following, at minimum:
- Loan applications and processing: Acknowledgment of all applications; written communication of terms and conditions in the vernacular language of the borrower; reasons for rejection conveyed in writing.
- Loan appraisal and terms: All loan agreements must specify the annualized rate of interest and the method of application; no unilateral change to terms without notice.
- Disbursement: Timely disbursement following all conditions being met; no disbursement withheld as leverage for additional fees.
- Post-disbursement: Written notice of any change in interest rate or charges; no harassment of borrowers or guarantors during recovery.
- Grievance redressal: NBFC must designate a Grievance Redressal Officer with contact details publicly displayed; complaints must be acknowledged within 7 working days.
Non-compliance with the FPC exposes an NBFC to regulatory action under Section 45-IA of the RBI Act, including suspension or cancellation of the CoR in extreme cases.
Digital Lending Guidelines Compliance for NBFCs
RBI’s Digital Lending Guidelines, issued in 2022 and updated through 2025, apply to every NBFC that originates or facilitates loans through digital channels including through Lending Service Provider (LSP) partnerships and fintech co-lending arrangements.
The four non-negotiable requirements are:
- Direct disbursal: Loan funds must credit directly to the borrower’s bank account. Pass-through disbursals via an LSP’s pool account are prohibited.
- Key Fact Statement (KFS): The NBFC must provide a standardized KFS to the borrower before loan execution. The KFS must state the Annual Percentage Rate (APR) in a prescribed tabular format, with no hidden charges.
- Cooling-off period: Borrowers can exit a digital loan within a board-approved cooling-off window (minimum 3 days for loans with tenor up to 7 days; otherwise determined by the NBFC’s board) without prepayment penalty.
- Data minimization and consent: The NBFC and its LSPs may collect only data necessary for credit assessment, stored on India-based servers, with express borrower consent obtained before collection.
LSP agreements must be board-approved, with the NBFC retaining primary responsibility for compliance. The regulatory exposure for LSP non-compliance falls on the NBFC not the LSP.
NBFCs processing personal data under the Digital Personal Data Protection Act, 2023 will find significant overlap between DPDP obligations and the Digital Lending Guidelines’ data consent and localization requirements. Altacit Global’s Technology and Privacy practice addresses both frameworks in our DPDP compliance guide.
Ongoing NBFC Compliance Calendar
Registered NBFCs must file periodic returns with the RBI. Missing a filing deadline or submitting an inaccurate return triggers regulatory scrutiny and, for Upper Layer NBFCs, may affect the annual classification exercise.
Return | Applicability | Frequency | Deadline |
NBS-1 (Liabilities and Assets) | Deposit-taking NBFCs | Quarterly | Within 15 days of quarter end |
NBS-2 (Investments) | Deposit-taking NBFCs | Quarterly | Within 15 days of quarter end |
NBS-7 (Capital Funds, Risk Assets) | Non-deposit-taking NBFCs with assets ₹100 crore+ | Quarterly | Within 15 days of quarter end |
NBS-9 (Statutory Liquid Ratio) | Deposit-taking NBFCs | Monthly | Within 7 days of month end |
ALM Returns | Middle and Upper Layer NBFCs | Monthly/Quarterly | Varies by sub-return |
Audited Annual Financials | All NBFCs | Annual | Within 30 days of AGM |
FMR-1 (Fraud Monitoring) | All NBFCs | As applicable | Within 3 weeks of fraud detection |
Branch Info Return | All NBFCs | Annual | 31 January each year |
RBI publishes updated return timelines through COSMOS and Master Direction amendments. Altacit Global’s compliance team tracks RBI circular releases and advises NBFC clients on filing obligations as they evolve.
Start Your NBFC Registration with Altacit Global
Altacit Global’s Banking and Finance practice advises NBFCs from pre-registration structuring through ongoing RBI compliance. Our team handles COSMOS portal applications, NOF verification, Fair Practices Code drafting, Digital Lending Guidelines compliance, and scale-based regulatory audits. We work from offices in Chennai, Bangalore, Hyderabad, Kochi, and Coimbatore.
Contact us at info@altacit.com to discuss your NBFC registration or compliance review.
Frequently Asked Questions: NBFC Registration India
Q1: Can a startup get an NBFC licence with less than ₹10 crore capital?
No. The minimum Net Owned Funds required for any NBFC registration under Section 45-IA of the RBI Act, 1934 is ₹10 crore. RBI will not process an application where the NOF falls below this threshold. The ₹10 crore must be in liquid assets and verified by a statutory auditor’s certificate at the time of application.
Q2: How long does NBFC registration take in India?
From the date of a complete, deficiency-free submission on the COSMOS portal, RBI currently takes 90 to 180 days to issue a Certificate of Registration. The most common cause of delay is an incomplete application missing documents or inconsistencies between the business plan and the company’s financials trigger query cycles that can add 30 to 60 days per round.
Q3: Does an NBFC need a separate licence for each state?
No. A single Certificate of Registration issued by RBI permits an NBFC to operate across India. However, an NBFC that accepts public deposits must notify RBI and update its CoR conditions before expanding into new states. State money-lending laws may separately apply to interest rate caps in certain states, but they do not require a separate NBFC licence.
Q4: What happens if a company lends money without NBFC registration?
Operating as an unregistered NBFC is a criminal offence under Section 58B of the Reserve Bank of India Act, 1934. Penalties include imprisonment of up to five years, fines of up to ₹10 lakh per day of default, and RBI’s power to direct repayment to all depositors. The 50-50 principal business test determines whether the obligation to register exists stated business purpose does not override financial reality.
