NBFC Company

NBFC Company​- An Overview

Full Form of NBFC

Non-Banking Financial Company

NBFCs are companies registered under the Companies Act, 2013 (or the earlier Companies Act, 1956), which engage in financial activities such as lending, investing, and financial asset acquisition. However, NBFCs do not hold a banking license from the Reserve Bank of India.

Core Activities Allowed

Providing loans and advances
Acquiring shares, stocks, bonds, debentures, or other marketable securities
Engaging in lease and hire-purchase activities
Operating insurance or chit fund businesses

Activities Not Allowed

Agricultural activities
Industrial production
Purchase or sale of physical goods (excluding securities)
Sale, purchase, or construction of immovable property
Provision of general services

PROCESS OF - NBFC Company

Form a private or public limited company with a minimum Net Owned Fund (NOF) of ₹2 crore, consisting solely of equity share capital (no preference shares allowed)

Open a bank account and deposit the full amount of ₹2 crore. This account must remain unencumbered and lien-free

Apply online for a Certificate of Registration (CoR) on the RBI COSMOS portal

Submit the physical documents and application printout to the RBI Regional Office

Once reviewed and verified, RBI grants the NBFC license

Note: RBI may request additional documents or clarifications during the evaluation process. Only upon complete satisfaction will it issue the Certificate of Registration to commence NBFC operations.

Documents Required for NBFC Company

Requirement 1: Documents to Submit to RBI

Certified copy of the Certificate of Incorporation (Issued by ROC)
Extract of the Main Object Clause in the MoA indicating financial business intent
Board Resolution stating:
– The company will follow RBI’s Fair Practices Code
– The company will not perform NBFC activities or accept public deposits before registration

Audited financials including:
– Balance Sheet and Profit & Loss Account
– Director’s Report and Auditor’s Report (for up to 3 years or since incorporation)

Educational and professional qualification certificates of all directors
Experience proof of directors in financial or banking services
Banker’s Report reflecting the company’s account conduct and status of deposit/loan balances as on the date of application

Requirement 2: Basic Eligibility Criteria

The company must be incorporated under the Companies Act, 2013 or Companies Act, 1956
The company must maintain a minimum Net Owned Fund (NOF) of ₹2 crore

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    FAQ'S

    Frequently Asked Questions

    Find answers to some of the most common questions about our services. If you don’t see what you’re looking for, feel free to reach out to us.

    1. What is an NBFC and how is it different from a bank?

    An NBFC (Non-Banking Financial Company) provides financial services like loans, advances, and investment in securities but does not hold a banking license and cannot accept demand deposits like banks. NBFCs are regulated by the RBI, but they operate under different norms compared to banks.

    2. What is the minimum capital requirement to start an NBFC in India?

    To register an NBFC with the Reserve Bank of India (RBI), a company must have a minimum Net Owned Fund (NOF) of ₹2 crore (for most categories, excluding specialized NBFCs like CIC or HFCs).

    3. Is RBI approval mandatory for all NBFCs?

    Yes, every company planning to operate as an NBFC must obtain a Certificate of Registration (CoR) from the RBI before starting any financial activity. Without this license, offering financial services is considered illegal.

    4. Can a foreign company start an NBFC in India?

    Yes, foreign investors can start an NBFC in India, subject to FDI regulations and with prior approval from RBI. However, they must meet the capital requirement and other compliance norms applicable to Indian NBFCs.