Requirements to Set Up an NBFC in India

Statutory basis

Every NBFC must obtain a Certificate of Registration (COR) from the Reserve Bank of India under Section 45-IA of the RBI Act, 1934, before commencing or carrying on the business of a non-banking financial institution.

Core eligibility conditions

• Company must be incorporated under the Companies Act, 2013 (or erstwhile 1956 Act)
• Minimum Net Owned Fund (NOF) of ₹10 crore (revised threshold under RBI’s Scale-Based Regulation glide path — verify the current applicable figure and phase-in date before relying on this)
• At least one director with relevant financial-sector experience
• Promoters/directors must satisfy RBI’s “Fit and Proper” criteria — clean credit history, no history of default or regulatory action
• A viable, documented business plan for the next three years
• No overlap with activities requiring a separate regulator’s license unless otherwise permitted

Application process (summary)

1. Entity incorporation with an appropriate object clause
2. Capital infusion to meet NOF requirement, evidenced by a Chartered Accountant’s certificate
3. Preparation of the application and supporting documents (board resolutions, KYC, net-worth certificates, business plan, policies)
4. Online submission through RBI’s PRAVAAH portal
5. Regional Office scrutiny and query resolution
6. Grant of Certificate of Registration

Practical implication: NOF thresholds and layer classifications are subject to RBI notification — SBR thresholds have changed before and will again. Treat the figures on this page as indicative and confirm the current position before acting.