documents required for nbfc registration

Documents Required For NBFC Registration

NBFC Registration: An Overview

NBFC stands for Non-Banking Financial Company which is a company registered under the Companies Act, 2013, engaged in the business of providing loans & advances, acquisition of shares/stocks/bonds/debentures/securities issued from the government or the local authority or other marketable securities of similar nature, leasing, hire-purchase, insurance business, and chit business. 

However, those institutions whose principal business is that of agriculture activity, industrial activity, purchase or sale of goods (other than securities), or providing any services and sale/purchase/construction of the immovable property are excluded from the definition of NBFCs.
Moreover, a Non-Banking Financial Company also refers to a company having the principal business of obtaining deposits under any scheme of arrangement in a lump sum or installments through contributions or in any other manner, is also a non-banking financial company (like Residuary Non-Banking Company). Hence any non-banking institution desirous of engaging in such activities should apply for NBFC Registration.

Pre- Requisites for NBFC Registration 

The following conditions should be met before an NBFC is registered:

  1. Firstly the financial institution desirous of obtaining NBFC Registration should be established as a company under the Companies Act 1956/2013;
  2. Secondly, a minimum of 1/3rd of the Directors should hold a minimum of 10 years of experience in finance, and such person should be employed as a full-time Director;
  3. The applicant company should have a detailed business plan for the next 5 years;
  4. The company needs to maintain a net-owned fund to obtain registration. Currently, the company is required to have a net-owned fund of 2 crore rupees; however, slight
  5. changes have been made after the RBI introduces the scalar-based regulation. (Note- You can find the revised net owned fund requirements below);
  6. The CIBIL score of the company, its directors, and its members should be acceptable, which would mean they don't have any record of default in paying loans;
  7. The object clause specified in the Memorandum of Association must be in-line with the business plan;
  8. The directors should meet the fit and proper criteria.

Documents required for NBFC Registration

The following documents should be kept ready:

  1. Company Incorporation Certificate;
  2. Detailed information on management along with company brochure;
  3. Copy of PAN/Corporate Identity Number (CIN) of the company;
  4. Documents of the location/address;
  5. A Certified copy of the Memorandum of Association & Articles of Association;
  6. List of Directors' profiles which should be duly signed;
  7. Qualification certificate of directors as well as their experience certificate;
  8. CIBIL/credit reports of the Directors of the Company;
  9. Board resolution on ‘Fair Practices Code’ and a certified copy of the same;
  10. Certificate issued from the statutory auditor declaring that the company doesn’t hold any public deposit and does not accept it;
  11. Certificate specifying owned funds on the date of the application from a Statutory Auditor;
  12. Shareholder KYC, CIBIL report, ITR, and banker report;
  13. Furnish information on the bank account, balances, loans, credits, etc.;
  14. Audited balance sheet as well as P&L statement with the directors and auditor’s report of the last three years;
  15. Self-certified copy of bank statement and ITR;

NBFC Registration Procedure

The process for the registration of NBFC is given below – 

Arranging the Documents

The applicant needs to arrange all the relevant documents required to initiate the process of NBFC Registration.
Filing the Application with RBI 
After arranging the relevant documents, the applicant must apply with the authority.

Submission of Application and Documents for Verification 

The next step is the submission of the application along with the necessary documents by the applicant for verification by the authority.
The authority will verify the documents and application to check the accuracy of the submissions made by the applicant. 

Issue of Registration Certificate 

After successfully verifying the application and documents, the authority will issue the registration certificate. 

Revised Categorisation of NBFCs

As per the revised framework, RBI has notified 4 scale-based layers to regulate NBFCs, i.e. Base layer, Middle layer, Upper layer, and Top layer.
Scalar Based Regulatory Framework for NBFCs- 2021
On October 22, 2021, the Reserve Bank of India announced a scale-based revised regulatory framework for NBFCs to have a tight oversight of the sector. As per the scale-based regulatory framework for Non-Banking Financial Companies, there will be more categories of NBFCs as per their activity with stringent rules.
The key highlights of the revision are as follows:
There will be a ceiling of 1 crore rupees per borrower for financing subscriptions to IPO.

The regulatory structure of the NBFCs will include 4 layers: 

Base Layer- Comprising non-deposit taking NBFCs below asset size of 1000 crore rupees; 

Middle Layer- Comprising all deposit-taking NBFCs, non-deposit-taking NBFCs with an asset size of 1000 crore rupees and more;
Upper Layer- The top 10 eligible NBFCs in terms of asset size will reside in this layer; 

Top Layer- This layer can get populated if the regulator believes that there is a substantial increase in potential risk from specific NBFCs in the upper layer.

The net owned fund requirement will be hiked for all NBFCs to 10 crore Rupees with certain exceptions-

The net owned fund requirement will be hiked for all NBFCs to 10 crore Rupees with certain exceptions-


Present NOF

By Mar 2025

By Mar 2027


2 crore rupees

5 crore rupees

10 crore rupees


5 crore rupees

7 crore rupees

10 crore rupees


5 crore rupees

7 crore rupees

10 crore rupees

In the case of NBFC P2P, NBFC AA, and NBFC without public funds and no customer interface, the net owned fund will be 2 crore rupees.

 In the case of NBFC P2P, NBFC AA, and NBFC without public funds and no customer interface, the net owned fund will be 2 crore rupees.

NBFCs will be required to recognize loans overdue for more than 90 days as NPAs by March 2026 and over 150 days by March 2024.

Note: These guidelines will be effective from 1st October 2022. Further, the instructions related to the ceiling on IPO funding shall come into effect from 1st April 2022.

Created & Posted by (garima)
Article assistant  at TAXAJ

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