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Key Documentation Required for NBFC License Application

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 Obtaining a Non-Banking Financial Company (NBFC) license from the Reserve Bank of India (RBI) is a detailed and compliance-driven process governed by Chapter IIIB of the RBI Act, 1934. The RBI plays a crucial role in ensuring that only entities with strong financial health, sound management, and transparent operations are permitted to undertake lending and investment activities. This framework helps maintain financial stability, consumer protection, and systemic integrity within India’s non-banking finance sector.

To secure the license, applicants must submit an extensive set of documents demonstrating capital adequacy, governance standards, and regulatory preparedness. The process is guided by the RBI Master Direction Non-Banking Financial Company (Reserve Bank) Directions, 2016, which lays down eligibility norms, and the Scale-Based Regulatory (SBR) Framework, 2023, which introduces tier-based supervision. These ensure that applicants meet modern prudential norms and are equipped to operate responsibly within India’s evolving financial ecosystem.

In this article, CA Manish Mishra talks about Key Documentation Required for NBFC License Application.

Foundational Documents

The first step in applying for an NBFC license is to establish the company’s legal foundation and business intent through key incorporation documents. The Certificate of Incorporation (CoI), issued by the Registrar of Companies (ROC) under the Companies Act, 2013, serves as proof of the company’s existence and legal standing. Alongside this, the Memorandum of Association (MoA) and Articles of Association (AoA) define the company’s objectives and internal governance structure.

The object clause in the MoA plays a pivotal role it must clearly specify that the company’s primary business is related to financial activities such as lending, hire purchase, leasing, or investment in securities. The Reserve Bank of India (RBI) scrutinizes this clause carefully, and any mention of non-financial or diversified activities (like trading, manufacturing, or real estate) can lead to rejection of the NBFC license application. Thus, ensuring that the foundational documents reflect a focused and compliant financial objective is crucial for successful registration.

Board Resolution and Net Owned Fund (NOF) Proof

An important prerequisite for obtaining an NBFC license is a formal Board Resolution passed by the company’s directors, authorizing the application to the Reserve Bank of India (RBI) under Section 45-IA of the RBI Act, 1934. This resolution signifies the company’s commitment to engaging in financial business and ensures that the decision has been duly approved at the board level in compliance with corporate governance norms under the Companies Act, 2013.

Equally important is meeting the Net Owned Fund (NOF) requirement a key financial eligibility criterion for NBFC registration. As per the RBI’s latest amendment effective March 2025, an applicant must maintain a minimum NOF of ₹10 crore, reflecting its financial soundness and capacity to absorb risk. The applicant must submit audited financial statements, along with a Chartered Accountant’s certificate verifying the accuracy of NOF computation. The NOF must consist of paid-up equity capital and free reserves, excluding revaluation reserves or borrowed funds, ensuring that only genuine capital is considered. Compliance with this requirement demonstrates financial stability and strengthens the company’s case for RBI approval.

Director and Promoter Information

The credibility and expertise of those leading a Non-Banking Financial Company (NBFC) form the cornerstone of RBI’s licensing decision. Under Section 45-IA(4)(c) of the Reserve Bank of India Act, 1934, every applicant must undergo a “fit and proper” assessment to ensure that directors and promoters possess integrity, professional competence, and financial reliability.

RBI’s Fit and Proper Criteria

The RBI evaluates whether the management team can uphold financial discipline and governance standards. Each director and promoter must submit a detailed professional profile, including educational qualifications, experience in financial services, and current board positions in other companies. This information helps the RBI assess the applicant’s capability to manage regulated financial activities responsibly.

Financial and Background Verification

To substantiate credibility, the application must include:

  • CIBIL credit reports of directors and major shareholders.

  • Income Tax Returns (ITRs) for the last three financial years.

  • KYC documents, such as PAN, Aadhaar, passport, and address proof.
    These documents allow RBI to assess the financial integrity and compliance history of the management team.

Statutory Declarations and Affidavits

Each director must file Form DIR-8 under the Companies Act, 2013, declaring that they are not disqualified under Section 164 from holding directorship. Additionally, affidavits must be provided confirming that the directors or promoters have never been associated with any company whose NBFC Certificate of Registration (CoR) was cancelled by the RBI.

Purpose and Significance

This stage ensures that the leadership of the NBFC is both competent and compliant. The RBI’s due diligence protects the financial system from unethical promoters, ensuring that only those with a strong track record of financial integrity, sound judgment, and regulatory respect are permitted to run NBFCs. This vetting process builds public trust and safeguards the credibility of India’s non-banking financial sector.

Shareholding and Corporate Structure

The Reserve Bank of India (RBI) places strong emphasis on ownership transparency and corporate governance when evaluating NBFC license applications. A clear and well-documented shareholding and corporate structure is an important for assessing control, accountability, and potential risks of indirect ownership or cross-holding among related entities.

Disclosure of Shareholding Pattern

Every applicant must submit a detailed shareholding pattern indicating the percentage of ownership held by each shareholder, whether individual, corporate, or institutional. This includes details of equity capital, voting rights, and preference shares, if any. The objective is to ensure that the promoters and key investors have the financial capability and genuine interest to manage a regulated financial institution.

Ultimate Beneficial Ownership (UBO) Disclosure

As per the Companies (Significant Beneficial Ownership) Rules, 2018, companies are required to identify and disclose their Ultimate Beneficial Owners (UBOs) individuals who ultimately control or benefit from the shareholding, even if ownership is held indirectly through layered structures. Each UBO must submit KYC details, declarations, and source of funds to ensure full transparency. The RBI uses this information to prevent money laundering, benami holdings, or foreign control through proxy ownership.

Documentation for Corporate Shareholders

If the applicant company’s shareholders include other companies or corporate bodies, the RBI mandates submission of additional documentation such as:

  • Board Resolution authorizing the investment in the NBFC.

  • Certificate of Incorporation and MoA/AoA of the corporate shareholder.

  • Group structure chart, certified by a Chartered Accountant, clearly showing the entire ownership hierarchy, including intermediate entities and their jurisdictions.

This disclosure helps the RBI trace the flow of ownership and identify any foreign or non-compliant entities in the chain.

Importance of Structural Transparency

Providing an accurate and traceable ownership structure ensures regulatory clarity and governance integrity. It allows the RBI to verify that the control of the NBFC lies with fit and proper persons and that there are no opaque or offshore arrangements. A transparent shareholding pattern not only expedites the licensing process but also strengthens the applicant’s credibility under India’s anti-money laundering (AML) and foreign direct investment (FDI) framework. 

Financial Statements and Bankers’ Reports

The financial strength of an applicant company is a key determinant in the Reserve Bank of India’s (RBI) evaluation process for granting an NBFC license. The RBI seeks to ensure that the entity has a stable capital base, credible financial track record, and sound fiscal management capable of sustaining regulated financial operations.

Audited Financial Statements

Applicants are required to submit audited financial statements for the last three financial years, duly certified by a Chartered Accountant. These include the balance sheet, profit and loss account, and cash flow statements, along with notes to accounts and audit reports.
The RBI examines these documents to verify the company’s net worth, liquidity position, profitability trends, and debt-to-equity ratio. For newly incorporated entities, provisional financial statements and capital infusion certificates may be required to demonstrate financial preparedness.

Bankers’ Reports

The banker’s report is another essential element in assessing the financial credibility of both the company and its promoters. The RBI mandates submission of confidential banker references obtained directly from the promoters’ and company’s principal banks.
These reports confirm the financial discipline, reputation, and integrity of account holders, reflecting their history of maintaining accounts responsibly and honoring obligations. A negative or unsatisfactory banker’s report may delay or even result in the rejection of the application.

Projected Financials and Business Viability

In addition to past financial records, the applicant must provide projected financial statements including balance sheets, income statements, and cash flow forecasts for the next three years. These projections should align with the company’s business plan, funding strategy, and regulatory capital requirements under the Scale-Based Regulatory (SBR) Framework, 2023.
The RBI reviews these forecasts to evaluate the company’s financial feasibility, ability to generate revenue sustainably, and adequacy of risk buffers to meet future obligations.

Importance of Transparent Financial Disclosure

Accurate and transparent financial documentation assures the RBI that the applicant has the capital adequacy, risk management framework, and fiscal prudence required to operate an NBFC. It reflects the entity’s commitment to compliance and strengthens confidence in its long-term viability as a responsible financial institution within India’s regulatory ecosystem. 

Business Plan and Operational Model

A well-drafted business plan is one of the most critical components of an NBFC license application, as it allows the Reserve Bank of India (RBI) to assess the applicant’s preparedness, financial sustainability, and compliance culture. The plan serves as a blueprint, demonstrating how the company intends to conduct its financial business while adhering to regulatory requirements and maintaining governance integrity.

Nature of Financial Activity

The business plan must clearly specify the core financial activities the NBFC intends to undertake such as loan financing, investment in securities, hire purchase, equipment leasing, or microfinance operations. The RBI uses this information to classify the proposed NBFC under an appropriate category (e.g., Investment and Credit Company, Infrastructure Finance Company, or Microfinance NBFC) and ensure compliance with sector-specific prudential norms.

Target Market and Risk Management Framework

The plan should identify the target customer base whether individuals, MSMEs, corporates, or rural borrowers—and explain the credit assessment model and risk management strategy to control default risk. It must highlight mechanisms for asset-liability management (ALM), capital adequacy maintenance, and provisioning norms in accordance with the RBI’s Scale-Based Regulatory (SBR) Directions, 2023. A robust risk governance framework demonstrates the applicant’s ability to operate responsibly within India’s financial system.

IT Infrastructure and Data Security

The RBI increasingly emphasizes technological resilience in NBFC operations. Therefore, the business plan must include a detailed IT system architecture, outlining the use of digital platforms for loan processing, data analytics, and customer service. It should also describe cybersecurity measures, data protection protocols, and compliance with RBI Circular DOR.AML.REC.57/14.01.001/2021-22, which mandates strong IT governance and secure data handling.

Regulatory Compliance Mechanisms

Every business plan must detail how the NBFC will comply with KYC (Know Your Customer) and AML (Anti-Money Laundering) requirements under the RBI Master Direction on KYC, 2016 and Prevention of Money Laundering Act (PMLA), 2002. It should also include adoption of a Fair Practices Code (FPC) as per RBI’s prescribed model, ensuring ethical lending, transparent interest rate disclosure, and responsible recovery practices.

Alignment with Capital Structure and Governance

Finally, the business plan must be consistent with the company’s capital base, shareholding pattern, and management capability. It should justify that the available Net Owned Fund (NOF) and governance structure are sufficient to support the proposed scale of operations.

Statutory Declarations and Undertakings

The Reserve Bank of India (RBI) places significant emphasis on formal declarations and undertakings to ensure that the applicant company and its management fully understand and commit to the legal and prudential framework governing Non-Banking Financial Companies (NBFCs). These documents form a crucial part of the regulatory assurance process, confirming the applicant’s readiness to operate within the bounds of the law.

Declaration under Section 45-IA(7) of the RBI Act, 1934

Every applicant must submit a statutory declaration affirming that the company will not commence or carry on any financial business until it receives a valid Certificate of Registration (CoR) from the RBI.
This declaration is a legal safeguard that prevents unlicensed financial operations, ensuring that entities do not engage in lending, investment, or deposit-taking before formal authorization. Any violation of this clause attracts penalties under Section 58B of the RBI Act.

Promoters’ and Directors’ Undertakings

Promoters and directors are required to file personal undertakings confirming their commitment to comply with:

  • Prudential norms relating to capital adequacy, asset classification, and provisioning.

  • Liquidity Risk Management guidelines under the Scale-Based Regulatory (SBR) Framework, 2023.

  • Fair Practices Code (FPC), KYC, and AML standards.

These undertakings demonstrate that the management understands its fiduciary responsibilities and is prepared to maintain regulatory discipline once the NBFC begins operations.

Statutory Auditor’s Certificate

A certificate from the Statutory Auditor must be attached, confirming that:

  • The company’s financial activities do not fall under any exempted category under RBI’s Master Directions.

  • The company is eligible to apply for registration under Section 45-IA of the RBI Act.

This certification acts as an independent validation of the company’s eligibility, lending credibility to the application.

Significance of Statutory Declarations

These declarations and undertakings form the ethical and regulatory backbone of the NBFC registration process. They help the RBI ensure that only fit, proper, and compliant entities enter India’s financial system, thereby upholding systemic integrity, governance transparency, and investor protection in the non-banking sector. 

Compliance with KYC, AML, and FEMA Regulations

Compliance with Know Your Customer (KYC), Anti-Money Laundering (AML), and Foreign Exchange Management Act (FEMA) norms forms a cornerstone of the NBFC license application process. The Reserve Bank of India (RBI) mandates that every applicant establish robust internal controls to prevent financial crime, ensure transparency in ownership, and maintain accountability in foreign investments.

KYC and AML Policy

As per the RBI Master Direction on Know Your Customer (KYC), 2016, every NBFC applicant must frame and submit a comprehensive KYC and AML Policy. This policy should outline procedures for customer identification, verification, and risk categorization, along with mechanisms for ongoing monitoring of transactions.
Compliance with the Prevention of Money Laundering Act (PMLA), 2002 and the Prevention of Money Laundering (Maintenance of Records) Rules, 2005 is also mandatory. The applicant must ensure systems are in place to detect and report suspicious transactions (STRs) and cash transaction reports (CTRs) to the Financial Intelligence Unit (FIU-IND).

RBI evaluates whether the NBFC’s proposed framework includes:

  • Appointment of a Principal Officer and Designated Director for AML compliance.

  • Adequate customer due diligence (CDD) processes for individuals, corporates, and beneficial owners.

  • Record-keeping procedures to preserve KYC data for at least five years post-termination of a customer relationship.

FEMA Compliance for Foreign Investment

Where the NBFC applicant has foreign direct investment (FDI), compliance with the Foreign Exchange Management (Non-Debt Instruments) Rules, 2019 and FEMA (Transfer or Issue of Security by Persons Resident Outside India) Regulations is mandatory.
Applicants must provide a FEMA compliance certificate confirming that:

  • The foreign investor’s shareholding structure adheres to Rule 21 of FEMA (NDI) Rules.

  • Sectoral caps and pricing guidelines for share transfers are followed.

  • All requisite filings such as Form FC-TRS (for transfer of shares) and Form FC-GPR (for issue of shares) have been made through the FIRMS portal within the prescribed timelines.

Additionally, investments from countries sharing land borders with India—such as China, Bangladesh, Nepal, or Pakistan—must comply with Press Note 3 (2020), which mandates Government approval prior to execution of the transaction.

Valuation and Reporting

When non-resident investors are involved, the application must include a share valuation certificate issued by a Category-I Merchant Banker or Chartered Accountant, ensuring compliance with both FEMA and Income Tax Rules, 1962.
This valuation ensures that the shares are issued or transferred at a fair market value (FMV), preventing underpricing or overvaluation that could lead to regulatory scrutiny.

Importance of Integrated Compliance

By aligning with KYC, AML, and FEMA regulations, applicants demonstrate a commitment to transparency, ethical conduct, and international best practices. The RBI’s objective is to ensure that new NBFCs entering the financial system are not only financially sound but also equipped to mitigate risks of money laundering, terrorism financing, and illicit foreign investment, thereby safeguarding the integrity of India’s financial ecosystem.

Technology, Risk, and Governance Framework

The Reserve Bank of India (RBI) has significantly strengthened the governance and technological oversight of Non-Banking Financial Companies (NBFCs) under the Scale-Based Regulatory (SBR) Directions, 2023. As part of the NBFC license application, the RBI now requires detailed disclosures about the applicant’s IT systems, risk management policies, and governance structure, ensuring operational integrity, cyber resilience, and ethical conduct across all layers of NBFCs.

IT Infrastructure and Cybersecurity Policies

Applicants must provide a comprehensive IT infrastructure and cybersecurity framework in line with the RBI Circular DOR.AML.REC.57/14.01.001/2021-22, which emphasizes data security, system integrity, and cyber risk management.
The disclosure should include:

  • System architecture diagrams showing data flow, backup, and recovery protocols.

  • Policies for data encryption, multi-factor authentication, and secure storage of customer information.

  • Cyber audit frequency, incident response mechanism, and disaster recovery systems.
    RBI assesses whether the NBFC has adequate digital controls to safeguard sensitive financial data, especially as many NBFCs operate on digital lending or fintech-based models.

Risk Management and Governance Committees

Under the SBR Directions, 2023, all NBFCs particularly those classified in the Middle and Upper Layers must establish the following governance committees:

  • Risk Management Committee (RMC): Responsible for monitoring credit, market, liquidity, and operational risks.

  • Audit Committee: Oversees financial reporting accuracy, internal audits, and regulatory compliance.

  • Nomination and Remuneration Committee (NRC): Ensures fair appointment and compensation of directors and key managerial personnel.

For Middle Layer NBFCs and above, the composition of these committees must include independent directors, thereby strengthening accountability and transparency in management decisions.

Whistleblower and Grievance Redressal Mechanisms

To enhance ethical governance and stakeholder protection, the RBI mandates that every NBFC applicant institute a Whistleblower Policy and Grievance Redressal Mechanism (GRM).

  • The Whistleblower Policy allows employees and stakeholders to confidentially report unethical practices or regulatory violations without fear of retaliation.

  • The GRM ensures that customer complaints related to loan processing, repayment, or data handling are addressed promptly and fairly, aligning with the Fair Practices Code (FPC) requirements.

These frameworks reflect RBI’s push toward responsible lending, corporate ethics, and consumer protection in the financial services sector.

Emphasis on Governance as a Licensing Criterion

RBI now evaluates governance quality as a core eligibility criterion for granting NBFC licenses. A company’s readiness to operate securely and transparently is judged not only by its capital but also by its governance culture, risk resilience, and technological preparedness.

In essence, strong IT, risk, and governance disclosures are no longer optional they represent the RBI’s expectation that NBFCs evolve into bank-like, well-supervised financial institutions, contributing to the stability and integrity of India’s broader financial ecosystem.  

Submission and Review Process

The final stage of obtaining an NBFC license from the Reserve Bank of India (RBI) involves a rigorous submission, verification, and review process. This step ensures that only entities meeting all financial, managerial, and governance standards under the RBI Act, 1934 and NBFC Master Directions are authorized to operate in India’s financial system.

Filing through RBI COSMOS Portal

All NBFC license applications must be submitted through the RBI’s COSMOS Portal the centralized online platform for registration and supervision. The applicant company must create an account, fill in the required fields, and upload all supporting documents in prescribed formats (PDF or scanned copies).

Documents typically include:

  • Foundational corporate documents (MoA, AoA, Incorporation Certificate).

  • Board resolution under Section 45-IA authorizing the NBFC registration.

  • Details of directors, promoters, shareholding, and NOF proof.

  • Business plan, financial projections, and compliance declarations.

Once the online submission is complete, a reference number is generated, which must be quoted in all future correspondence with the RBI.

Physical Submission to RBI Regional Office

After online filing, applicants must send hard copies of the complete application set to the Department of Supervision at the concerned RBI Regional Office, under whose jurisdiction the company’s registered office is situated.
The submission must include:

  • A signed and stamped printout of the COSMOS application.

  • Physical copies of all uploaded documents, duly certified by a Chartered Accountant (CA) or Company Secretary (CS).
    This dual process digital and physical ensures authenticity and traceability of all documents submitted for regulatory review.

RBI Review and Background Verification

Once received, the RBI Department of Supervision begins a comprehensive review. This includes:

  • Verification of the Net Owned Fund (NOF) to confirm it meets the ₹10 crore threshold (effective from March 2025).

  • Background checks on promoters, directors, and group entities to assess the “fit and proper” criteria under Section 45-IA(4)(c).

  • Review of business models, governance structures, and risk management systems for compliance with the Scale-Based Regulatory (SBR) Directions, 2023.
    The RBI may also coordinate with other regulatory agencies such as the Income Tax Department, FIU-IND, or Enforcement Directorate (ED) for additional background checks, especially in cases involving foreign investment.

Clarifications, Interviews, and Final Approval

During the review process, the RBI may issue clarifications or request additional documents, such as auditor confirmations, policy updates, or proof of compliance with KYC/AML norms.
In certain cases especially for complex group structures or foreign promoters the RBI may conduct personal interviews or video interactions with directors to evaluate managerial competence and understanding of regulatory responsibilities.

If satisfied with the applicant’s compliance and governance standards, the RBI issues a Certificate of Registration (CoR) under Section 45-IA(1) of the RBI Act, 1934, authorizing the company to commence NBFC operations.

Importance of Accuracy and Compliance

Any discrepancy, incomplete documentation, or misrepresentation during the review process can result in rejection or delay under Section 45-IA(6). Therefore, applicants must ensure that every document financial, legal, or procedural is accurate, updated, and in full conformity with RBI’s prescribed norms.

Recent Regulatory Updates

  • The RBI Master Direction on SBR, 2023 introduced differentiated regulatory layers, making governance and IT standards stricter for larger NBFCs.

  • The Draft NBFC Licensing Guidelines, 2025 propose enhanced fit and proper criteria for promoters, requiring declarations on ultimate beneficial ownership and cross-border funding transparency.

Conclusion

Preparing a complete NBFC License Application is a meticulous and compliance-driven process that requires precision, authenticity, and foresight. Every document from the company’s foundational papers such as the MoA and AoA to the fit and proper declarations, KYC/AML policies, and FEMA compliance proofs must demonstrate strict adherence to the Reserve Bank of India (RBI)’s regulatory framework. The Scale-Based Regulatory (SBR) Directions, 2023, have raised expectations on governance, risk management, and IT resilience, making accuracy in documentation and clarity in disclosures more crucial than ever.

Beyond meeting procedural requirements, a strong application should present a clear business plan, demonstrate adequate capital adequacy (NOF of ₹10 crore), and show preparedness for long-term operational compliance. When supported by transparent ownership structures and sound governance systems, it not only ensures faster RBI approval but also builds investor confidence and lays the foundation for a sustainable, well-governed NBFC in India’s evolving financial sector.

Frequently Asked Questions (FAQs) 

Q1. What is the minimum capital requirement for applying for an NBFC license?

Ans. As per RBI’s latest amendment (effective March 2025), an applicant company must have a minimum Net Owned Fund (NOF) of ₹10 crore. This must be supported by a Chartered Accountant’s certificate verifying the source and composition of funds. The amount should be free from any borrowings or obligations and must be maintained in a scheduled commercial bank account in the company’s name.

Q2. What are the foundational documents needed for an NBFC license application?

Ans. The essential foundational documents include:

  • Certificate of Incorporation issued by the Registrar of Companies (ROC).

  • Memorandum and Articles of Association (MoA & AoA) clearly stating financial activity as the main object.

  • Board Resolution under Section 179(3) of the Companies Act, 2013 authorizing the NBFC registration application.

  • PAN, GST, and registered office proof of the company.

Q3. What financial documents must be submitted to RBI?

Ans. Applicants must provide:

  • Audited financial statements for the last three years (if applicable).

  • Projected financial statements for the next three years showing sustainability and capital adequacy.

  • Banker’s report verifying the integrity and conduct of promoters and the company.

  • NOF certificate and CA-certified computation sheet confirming capital eligibility as per RBI norms.

Q4. What information is required for directors and shareholders?

Ans. Under Section 45-IA(4)(c) of the RBI Act, directors and promoters must meet RBI’s “fit and proper” criteria. The documents required are:

  • KYC documents (PAN, Aadhaar, Passport, Address proof).

  • Director Identification Number (DIN) and Form DIR-8 declaration.

  • CIBIL report and Income Tax Returns (ITRs) of the last three years.

  • Affidavit confirming they have not been involved with any company whose NBFC license was cancelled.

Q5. What is the significance of the business plan in the NBFC application?

Ans. A detailed business plan is a mandatory submission under the RBI Master Direction – NBFC (Reserve Bank) Directions, 2016. It should explain:

  • The type of NBFC activity (lending, investment, leasing, etc.).

  • The target customer base, risk management policies, and operational structure.

  • The IT infrastructure and compliance mechanisms for KYC, AML, and Fair Practices Code (FPC).
    RBI uses this to assess the applicant’s feasibility, governance framework, and compliance preparedness.

Q6. Is RBI approval required before starting NBFC operations?

Ans. Yes. Under Section 45-IA(1) of the RBI Act, 1934, no company can commence NBFC operations without obtaining a Certificate of Registration (CoR) from the RBI. Any financial activity without registration is treated as a violation and may attract penalties under Section 58B of the Act.

Q7. What documents are required for shareholding and ownership disclosure?

Ans. Applicants must submit:

  • Detailed shareholding pattern and percentage of holdings.

  • Ultimate Beneficial Ownership (UBO) details under Companies (Significant Beneficial Ownership) Rules, 2018.

  • Corporate group structure chart, if the applicant is part of a conglomerate.

  • For corporate shareholders, board resolution and certificate of incorporation of the parent company are required.

Q8. What are FEMA and FDI compliance documents for foreign investors?

Ans. If the NBFC has foreign investment, the following must be included:

  • FEMA compliance certificate issued by a Chartered Accountant.

  • Valuation certificate under Rule 21 of FEMA (NDI) Rules, 2019.

  • Form FC-TRS (for share transfer) or Form FC-GPR (for new share issuance).

  • RBI notification and approval, if the investment is from a border-sharing country, as per Press Note 3 (2020).

Q9. Are KYC and AML policies mandatory for the application?

Ans. Yes. Under the RBI Master Direction on KYC (2016) and the Prevention of Money Laundering Act (PMLA), 2002, every NBFC applicant must adopt a written KYC/AML Policy. This should include customer identification, transaction monitoring, record-keeping, and reporting mechanisms to the Financial Intelligence Unit (FIU-IND).

Q10. How is the NBFC license application submitted to the RBI?

Ans. Applications must be submitted online through the RBI COSMOS portal along with scanned copies of all supporting documents. Physical copies must also be sent to the Regional Office of the Department of Supervision (RBI) under whose jurisdiction the company’s registered office falls. The RBI may seek clarifications or additional documents during review, and upon satisfaction, it grants the Certificate of Registration (CoR) authorizing the applicant to operate as an NBFC.

CA Manish Mishra is the Co-Founder & CEO at GenZCFO. He is the most sought professional for providing virtual CFO services to startups and established businesses across diverse sectors, such as retail, manufacturing, food, and financial services with over 20 years of experience including strategic financial planning, regulatory compliance, fundraising and M&A.