NBFC Registration in India — RBI approval is mandatory, capital is real, and "fintech" is not a category
An NBFC (Non-Banking Financial Company) is a company that carries on the business of financial activity — lending, investment, or accepting deposits — and is registered with the RBI under s.45-IA of the RBI Act 1934. Registration is mandatory before carrying on the business, the minimum net owned funds are being raised to ₹10 crore by 31 March 2027, and the classification (CIC, NBFC-ICC, NBFC-MFI) determines the rules. This page is the statute-cited version of what it takes.
The four things that matter
Where this structure actually goes wrong.
s.45-IA — RBI registration is mandatory, not optional
Section 45-IA of the RBI Act 1934 says no NBFC shall commence or carry on business without obtaining a certificate of registration from the RBI. Operating without it — for example, a company doing loan disbursals or deposit-like activity — is a direct violation carrying penalties and a possible RBI order to stop. "Fintech" changes nothing: if the business is lending or deposit-taking, the entity is an NBFC and needs registration.
RBI Act s.45-IA · mandatory CoR · operating without it = violation
Net owned funds — ₹2 crore now, ₹10 crore by March 2027
The minimum net owned fund (NOF) requirement was raised from ₹25 lakh to ₹2 crore for most NBFC categories by the RBI's October 2021 notification, with a phased increase to ₹5 crore by 31 March 2025 and ₹10 crore by 31 March 2027 under the scale-based regulation framework. New applicants effectively need substantial real capital — not a nominal company — before the RBI will register them.
RBI Oct 2021 notification · ₹2cr → ₹5cr (Mar 2025) → ₹10cr (Mar 2027) · SBR framework
CIC vs NBFC-ICC vs NBFC-MFI — the classification decides the rules
The RBI classifies NBFCs by activity: a Core Investment Company (CIC) holds at least 90% of its assets in investment in equity shares of group companies (75% of its income from such investments); an NBFC-Investment and Credit Company (NBFC-ICC) is the default lending category; an NBFC-Micro Finance Institution (NBFC-MFI) lends qualifying microfinance loans, with its own NOF and pricing caps. The classification determines registration, leverage, and reporting.
CIC (90% group equity) · NBFC-ICC (lending) · NBFC-MFI (microfinance) · each its own NOF & caps
Deposits — who can take them, and up to what
Most NBFCs are non-deposit-taking: they fund lending from equity and borrowings, not public deposits. Deposit-taking NBFCs (NBFC-D) need investment-grade credit ratings and can hold public deposits up to 1.5 times net owned funds, with a ceiling on interest rates. The default assumption — both for the RBI and for us — is that a new NBFC is non-deposit-taking. Public deposit acceptance is the exception, heavily regulated.
NBFC-D = credit rating + 1.5× NOF deposit cap · most new NBFCs are non-deposit-taking
Brutally honest
Where it wins. Where it hurts.
- ✓A regulated, legitimate route for lending, microfinance, or group investment
- ✓Classification options (CIC vs NBFC-ICC vs NBFC-MFI) fit different models
- ✓Access to institutional borrowing and securitisation once registered
- ✓Credibility with partners and regulators that unregistered lending lacks
- ✗RBI approval under s.45-IA is genuinely hard — NOF of ₹2 crore now, ₹10 crore by March 2027
- ✗Registration takes months and the RBI scrutinises the business plan, directors, and source of funds
- ✗Ongoing reporting, KYC/AML obligations, and RBI inspections once registered
- ✗Public deposits are tightly capped (1.5× NOF, credit rating required) — most NBFCs cannot take deposits
- ✗Operating without registration is a violation with serious consequences — there is no "start small" grey zone
Companies with real capital (₹2 crore+ NOF, heading to ₹10 crore by 2027) and a genuine lending, microfinance, or group-investment model that warrants RBI registration. Not for small loan businesses — the capital bar is the point.
Startups without capital, peer-to-peer style lending platforms, or anyone hoping NBFC registration is a cheaper way to take public deposits. It is not.
What we actually do
Five tracks, start to finish.
- 01NBFC classification & business planOne-time
CIC vs NBFC-ICC vs NBFC-MFI assessment, the business plan the RBI will accept, and the capital structure meeting the NOF requirement (₹2cr→₹10cr by 2027).
- 02RBI application (s.45-IA)Months
The CoR application through the RBI's COSMOS portal, director fit-and-proper documentation, and responses to the RBI's queries through the approval process.
- 03Pre-registration structuringOne-time
Entity, shareholding, and source-of-funds documentation structured so the RBI application is not rejected for capital-sourcing reasons.
- 04Post-registration complianceMonthly/quarterly
Periodic returns, KYC/AML policies, NPA norms, and RBI reporting calendar once the CoR is granted.
- 05Deposit & leverage adviceOngoing
Honest advice on deposit-taking (NBFC-D), the 1.5× NOF cap, credit rating requirements, and leverage options — including when the answer is to stay non-deposit-taking.
Common questions
Statute-cited answers.
Is NBFC registration mandatory?+
Yes. Section 45-IA of the RBI Act 1934 makes it an offence to commence or carry on the business of an NBFC without a certificate of registration from the RBI. If your company lends to the public, or carries on any financial activity that the RBI treats as NBFC business, operating without registration is a violation — regardless of what you call the business on your website.
What is the minimum net owned fund for an NBFC?+
The RBI raised the minimum NOF from ₹25 lakh to ₹2 crore by its notification of October 2021, with a phased increase under the scale-based regulation framework: ₹5 crore by 31 March 2025 and ₹10 crore by 31 March 2027 for most NBFC categories. Specialised categories (NBFC-MFI, NBFC-Factors, and others) have their own minimums, also moving toward ₹10 crore. The capital must be genuine net owned funds — not borrowed or nominal.
What is the difference between CIC, NBFC-ICC, and NBFC-MFI?+
A Core Investment Company (CIC) is a group-investment vehicle: at least 90% of its assets must be investments in equity shares of group companies, and at least 75% of its income must come from those investments. An NBFC-Investment and Credit Company (NBFC-ICC) is the general lending category — the default for a lending NBFC. An NBFC-Micro Finance Institution (NBFC-MFI) makes qualifying microfinance loans under the RBI's MFI directions, with its own NOF requirement and pricing caps.
Can an NBFC accept deposits from the public?+
Only if it is a deposit-taking NBFC (NBFC-D), and only under conditions: an investment-grade credit rating from an approved agency, and public deposits capped at 1.5 times net owned funds. Most NBFCs are registered as non-deposit-taking and cannot accept public deposits at all. If public deposits are the plan, the capital, rating, and regulatory scrutiny are all materially higher.
Can I run a lending business as a regular private company without NBFC registration?+
Not if it is the business. If a company's principal business is lending or financial activity — the RBI tests this by asset and income thresholds — it is an NBFC and needs registration under s.45-IA. Operating without it is a violation. Lending occasionally to related parties or as an incidental activity is different from making lending the principal business; where the line sits is exactly what the RBI examines.
Before you build a lending product, know whether you are already an NBFC.
We classify your model under the RBI framework, test whether you cross the NBFC thresholds, and either structure the s.45-IA application with the real NOF capital or tell you the honest truth about the cost.