In India, Non-Banking Financial Companies (NBFCs) play a key role in strengthening the financial system. They provide credit and financial services to individuals and businesses, especially in sectors where traditional banks may not always reach. However, to operate legally and sustainably, NBFCs must meet certain licensing requirements regulated by the Reserve Bank of India (RBI).
This blog gives you a detailed overview of NBFC licensing requirements, eligibility, and the process involved. It also explains how businesses can seek licenses for related financial activities like P2P lending, account aggregation, and prepaid payment instruments (PPIs).
What is an NBFC?
An NBFC is a financial institution registered under the Companies Act that provides financial services such as loans, asset financing, investment, and credit facilities. However, unlike banks, NBFCs cannot accept demand deposits or issue cheques drawn on themselves.
Despite these restrictions, NBFCs are vital for financial inclusion, supporting small and medium businesses, startups, and individuals who may not always have access to traditional bank loans.
Why NBFC Licensing is Important
Since NBFCs handle public funds and provide critical financial services, the RBI has made licensing mandatory. Proper licensing ensures:
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Regulatory compliance
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Transparency in financial operations
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Protection of customer interests
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Market credibility
Without an RBI NBFC License Registration, no company can legally carry out NBFC-related activities in India.
Basic Eligibility Criteria for NBFC License
Before applying for an NBFC license, companies must meet specific requirements set by the RBI. Some of the key eligibility criteria include:
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The company must be registered under the Companies Act, 2013 or 1956.
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A minimum Net Owned Fund (NOF) of ₹10 crore is required (for most NBFC categories).
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At least one director must have financial sector experience.
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The company’s business plan should align with NBFC activities.
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The applicant should ensure compliance with RBI’s Fair Practices Code.
Types of NBFC Licenses
NBFCs operate in different categories depending on their business model. The RBI issues licenses accordingly. Here are some important types:
1. Investment and Credit Company (ICC)
These NBFCs provide loans and advances, finance assets, and offer credit facilities.
2. Infrastructure Finance Company (IFC)
IFCs focus on providing credit to infrastructure projects such as roads, power, and telecom.
3. Microfinance Institution (MFI)
These cater to small borrowers and low-income groups by providing microloans.
4. Account Aggregators (AA)
Entities that help customers consolidate and share their financial data with their consent. To operate in this category, a company must apply RBI Account Aggregator License.
5. P2P Lending Platforms
NBFCs that provide peer-to-peer lending services must apply P2P Lending License from the RBI.
6. Prepaid Payment Instruments (PPI)
Companies issuing digital wallets or prepaid cards must apply PPI license online to comply with RBI regulations.
Step-by-Step Process for RBI NBFC License Registration
Getting an NBFC license requires a detailed procedure. Below are the key steps:
Step 1: Incorporate the Company
The first step is to incorporate a company under the Companies Act, 2013 with the objective of providing financial services.
Step 2: Ensure Capital Requirements
Maintain the required Net Owned Fund (NOF) of at least ₹10 crore. This must be kept as a fixed deposit in a scheduled commercial bank.
Step 3: Prepare Documents
Documents include:
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Certificate of Incorporation
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Detailed business plan
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Board resolution approving NBFC application
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Financial statements of the company
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KYC details of directors and shareholders
Step 4: File Application with RBI
Submit the application through the RBI’s COSMOS online portal along with necessary documents.
Step 5: Submit Hard Copy to Regional Office
After filing online, submit a physical copy of the application to the RBI’s regional office.
Step 6: RBI Verification and Approval
The RBI reviews the application, evaluates the documents, and if satisfied, grants the NBFC license.
Compliance Requirements After Getting NBFC License
Once licensed, NBFCs must follow RBI’s strict compliance framework, including:
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Filing annual returns and periodic reports with RBI.
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Following prudential norms regarding capital adequacy.
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Maintaining transparency in customer dealings.
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Ensuring grievance redressal mechanisms.
Failing to comply with these requirements can result in penalties or cancellation of the license.
Why Choose Corpbiz for NBFC License Assistance?
At Corpbiz, we simplify the complex process of obtaining an NBFC license. From documentation to compliance advisory, our experts ensure you meet every RBI requirement. Whether you want to apply RBI account aggregator license, apply P2P lending license, or apply PPI license online, Corpbiz provides end-to-end guidance.
FAQs on NBFC Licensing
Q1. What is the minimum capital requirement for RBI NBFC License Registration?
The minimum Net Owned Fund (NOF) required is ₹10 crore.
Q2. Can an NBFC accept deposits?
Only deposit-taking NBFCs (NBFC-D) registered with the RBI can accept deposits under strict conditions.
Q3. How long does it take to get an NBFC license from RBI?
The process usually takes 4–6 months, depending on documentation and RBI’s review.
Q4. Is an NBFC license mandatory for digital wallet services?
Yes, companies offering wallets or prepaid instruments must apply PPI license online.
Q5. Can an NBFC operate multiple financial services?
Yes, but it must obtain separate approvals for services like account aggregation or P2P lending.
Author Profile
Atul Shukla is a seasoned financial and compliance expert with extensive experience in NBFC licensing, RBI regulations, and corporate advisory. At Corpbiz, he helps businesses navigate complex regulatory frameworks and achieve seamless compliance for financial operations.
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