Non-Banking Financial Companies (NBFCs) play a pivotal role in India’s financial ecosystem by providing financial services without holding a banking license. From loans and credit facilities to wealth management and investments, NBFCs cater to diverse financial needs, particularly in underserved areas. However, to operate as an NBFC, businesses must secure NBFC registration from the Reserve Bank of India (RBI).

Here’s an in-depth guide on NBFC registration, its requirements, and the process involved.

What is an NBFC?

An NBFC is a financial institution engaged in various financial activities such as:

• Granting loans and advances
• Acquiring stocks, bonds, or debentures
• Managing portfolios and investments
• Leasing, hire-purchase, and insurance

Unlike banks, NBFCs cannot accept demand deposits, such as savings or current account deposits, nor can they issue cheques.

Why Register as an NBFC?

NBFC registration with the RBI is mandatory for companies intending to provide financial services. The benefits of registration include:

1. Legal Authorization: Ensures your business complies with the law.
2. Credibility: Builds trust among investors and customers.
3. Access to Funding: Registered NBFCs can secure loans and attract investments easily.
4. Market Opportunities: Registration allows businesses to expand into diverse financial services.

Eligibility Criteria for NBFC Registration

Before applying, ensure your business meets the following criteria:

1. Company Incorporation: The applicant must be a company registered under the Companies Act, 2013 or 1956.
2. Net Owned Fund (NOF): The company must have a minimum NOF of ₹2 crores.
3. Business Activity: At least 50% of the total assets and income of the company should be financial in nature.