India’s financial sector has witnessed major growth over the years, and Non-Banking Financial Companies (NBFCs) have become an important part of the country’s financial system. NBFCs provide loans, infrastructure funding, microfinance services, and financial support to startups, MSMEs, and individuals who may not always have access to traditional banking services. Due to their growing importance, the Reserve Bank of India (RBI) has established strict legal and regulatory provisions governing NBFC registration, governance, and operational compliance.

NBFC registration is not limited to obtaining approval from the RBI. After registration, NBFCs are required to continuously comply with prudential norms, capital adequacy requirements, KYC and anti-money laundering regulations, financial reporting obligations, statutory audits, cybersecurity requirements, and customer protection guidelines. The RBI regularly monitors NBFCs through inspections, filings, and compliance reporting to ensure financial stability and transparency. Failure to comply with RBI regulations may result in penalties, restrictions on lending activities, suspension of operations, or cancellation of the Certificate of Registration (CoR).

In this article, CA Manish Mishra talks about NBFC Registration and Post-Registration Compliance Framework.

Meaning and Legal Concept of NBFC

A Non-Banking Financial Company (NBFC) is a company incorporated under the Companies Act, 2013 that is engaged in financial activities such as providing loans and advances, acquisition of shares and securities, leasing, hire-purchase financing, insurance business, infrastructure financing, or investment activities. Although NBFCs perform financial functions similar to banks, they do not possess a banking license and therefore cannot accept demand deposits from the public like scheduled commercial banks.

The legal definition of an NBFC is provided under Section 45-I(f) of the Reserve Bank of India Act, 1934. According to RBI regulations, a company is classified as an NBFC if:

• Its financial assets constitute more than 50% of its total assets; and

• Income generated from financial assets constitutes more than 50% of its gross income.

This condition is commonly referred to as the “50-50 Test.” Both conditions must be satisfied simultaneously for a company to fall within the definition of an NBFC.

NBFCs have gained immense importance because they bridge the credit gap in sectors where banking penetration remains limited. They support MSMEs, startups, rural borrowers, vehicle financing, housing finance, infrastructure projects, and digital lending. However, because NBFCs deal with public funds and financial transactions, the RBI supervises them closely to ensure financial stability and protect customer interests.

Legal Context Governing NBFC Registration in India

The legal and regulatory context governing NBFCs is broad and continuously evolving. The primary legislation regulating NBFCs is the Reserve Bank of India Act, 1934, particularly Chapter IIIB dealing with non-banking institutions.

Section 45-IA of RBI Act, 1934

Section 45-IA is the most important provision governing NBFC registration. It clearly states that no company shall commence or carry on the business of a non-banking financial institution without:

• Obtaining a Certificate of Registration (CoR) from the RBI; and

• Maintaining the prescribed minimum Net Owned Fund (NOF).

This provision makes RBI registration mandatory for all eligible NBFCs before starting operations.

Section 45-IB

Section 45-IB requires NBFCs accepting public deposits to invest and maintain a percentage of deposits in approved liquid assets. This ensures liquidity protection and financial discipline.

Section 45-IC

Section 45-IC mandates every NBFC to create a reserve fund and transfer at least 20% of its net profit every year before declaring dividends. This reserve strengthens the financial position of NBFCs.

Apart from the RBI Act, NBFCs are also governed by:

• Companies Act, 2013

• Prevention of Money Laundering Act, 2002 (PMLA)

• Foreign Exchange Management Act (FEMA)

• RBI Master Directions

• KYC Master Directions

• Fair Practices Code

• Information Technology Act, 2000

• Digital Lending Guidelines

• SEBI regulations in certain cases

The RBI periodically issues circulars and notifications that further regulate governance, lending practices, outsourcing, cybersecurity, and disclosure obligations for NBFCs.

Classification and Types of NBFCs

The Reserve Bank of India (RBI) classifies Non-Banking Financial Companies (NBFCs) based on their nature of business activities and operational models. Different types of NBFCs provide different financial services such as lending, investment, housing finance, infrastructure funding, microfinance, and digital financial services. This classification helps the RBI apply suitable regulatory and compliance requirements according to the level of financial risk and systemic importance associated with each category.

Investment and Credit Company (ICC)

Investment and Credit Companies (ICCs) are among the most common types of NBFCs in India. These companies provide loans, advances, financing facilities, and investment-related services to individuals and businesses. Most lending-based NBFCs fall under this category and operate in areas such as personal finance, vehicle loans, and business financing.

NBFC-Micro Finance Institution (NBFC-MFI)

NBFC-MFIs provide small-value loans to low-income individuals, rural borrowers, and economically weaker sections of society. These institutions promote financial inclusion and support small borrowers who may not have access to traditional banking services. RBI regulations prescribe limits on loan amount, borrower income, and repayment structures.

Infrastructure Finance Company (IFC)

Infrastructure Finance Companies provide long-term financial assistance for infrastructure projects such as roads, airports, railways, power projects, and urban development. These NBFCs play an important role in supporting economic growth and large-scale infrastructure development in India.

Core Investment Company (CIC)

Core Investment Companies mainly hold shares and securities of group companies. Unlike regular lending NBFCs, CICs primarily function as investment holding companies. Due to their group-based financial structures, they are subject to special RBI regulations and governance requirements.

NBFC-Factor

NBFC-Factors are engaged in factoring business involving assignment and financing of receivables. These NBFCs help businesses improve liquidity by providing immediate funds against unpaid invoices and trade receivables.

Housing Finance Company (HFC)

Housing Finance Companies provide housing loans and real estate financing services. They operate under RBI supervision through the National Housing Bank framework and support residential housing development and home financing activities.

NBFC-Account Aggregator (NBFC-AA)

NBFC-Account Aggregators facilitate consent-based sharing of financial information between financial institutions and customers. They help improve digital financial data management and secure information exchange within the financial ecosystem.

NBFC-Peer-to-Peer Lending Platform (NBFC-P2P)

NBFC-P2P platforms operate online digital marketplaces connecting borrowers and lenders directly. These entities facilitate peer-to-peer lending activities while ensuring transparency and regulatory compliance in digital lending operations.

Scale-Based Regulatory (SBR)

The RBI introduced the Scale-Based Regulatory Framework (SBR) to regulate NBFCs according to their size, complexity, and systemic importance. Under this framework, NBFCs are categorized into:

• Base Layer

• Middle Layer

• Upper Layer

• Top Layer

Larger and systemically important NBFCs are subject to stricter governance norms, disclosure requirements, capital adequacy standards, and compliance obligations under this framework.

Eligibility Conditions for NBFC Registration

The Reserve Bank of India (RBI) has prescribed strict eligibility conditions for NBFC registration to ensure that only financially stable and professionally managed entities enter the financial sector. Since NBFCs deal with lending, investments, and financial activities, the RBI carefully evaluates the financial strength, management capability, and operational preparedness of the applicant before granting a Certificate of Registration (CoR).

Incorporation under Companies Act, 2013

The applicant must first be incorporated as a company under the Companies Act, 2013. Only companies registered with the Ministry of Corporate Affairs (MCA) are eligible to apply for NBFC registration. Partnership firms, LLPs, and sole proprietorships cannot obtain NBFC registration from the RBI.

Minimum Net Owned Fund (NOF)

The RBI has prescribed minimum Net Owned Fund (NOF) requirements to ensure financial stability of NBFCs. Most NBFCs now require a minimum NOF of ₹10 crore for registration.

NOF generally includes:

• Paid-up equity capital

• Free reserves

After deducting:

• Accumulated losses

• Deferred expenditure

• Intangible assets

The RBI verifies the genuineness and source of funds before granting approval.

Fit and Proper Standards

The RBI assesses whether promoters and directors are “Fit and Proper” to manage a financial institution. The evaluation is based on:

• Integrity

• Financial soundness

• Educational qualifications

• Professional competence

• Criminal background

The RBI conducts detailed due diligence and background verification before approving the NBFC application.

Business Plan Evaluation

Applicants must submit a detailed business plan explaining the proposed financial activities and operational structure of the NBFC.

The business plan generally includes:

• Proposed financial activities

• Market analysis

• Operational strategy

• Revenue projections

• Risk management

• Compliance systems

The RBI evaluates whether the proposed business model is practical, financially viable, and capable of complying with regulatory requirements.

Detailed Procedure for NBFC Registration

Step 1: Company Incorporation

The first step is incorporation of the company under the Companies Act, 2013 through the MCA portal.

Step 2: Capital Infusion

The promoters must infuse the required minimum Net Owned Fund into the company’s bank account.

Step 3: Documentation Preparation

The RBI requires extensive documentation including:

• Certificate of Incorporation

• MOA and AOA

• Net worth certificates

• Banker’s report

• Credit reports

• Director profiles

• Income tax records

• Financial projections

• Business plan

• Organizational structure

Step 4: Filing Application through COSMOS Portal

The RBI provides an online application facility through the COSMOS portal for NBFC registration.

Step 5: Submission of Physical Documents

Physical copies of documents must also be submitted to the RBI Regional Office.

Step 6: RBI Scrutiny and Due Diligence

The RBI scrutinizes:

• Promoter background

• Source of funds

• Governance standards

• Business viability

• Compliance capability

• Financial projections

The RBI may also seek clarifications or additional documents during the review process.

Step 7: Grant of Certificate of Registration

Upon satisfaction, the RBI grants the Certificate of Registration under Section 45-IA. Only after obtaining CoR can the NBFC legally commence financial business.

Post-Registration Compliance Context for NBFCs

Obtaining registration as a Non-Banking Financial Company (NBFC) from the Reserve Bank of India (RBI) is only the first step in operating a financial business in India. After receiving the Certificate of Registration (CoR), NBFCs remain under continuous regulatory supervision of the RBI and are required to comply with several financial, legal, operational, and governance-related obligations. These post-registration compliances are designed to ensure financial stability, customer protection, transparency, proper risk management, and smooth functioning of the NBFC sector. The RBI regularly monitors NBFCs through filings, inspections, audits, and compliance reporting to ensure that they operate within the prescribed regulatory framework.

Failure to comply with post-registration obligations may result in monetary penalties, restrictions on business operations, regulatory investigations, reputational damage, or cancellation of the NBFC license. Therefore, every NBFC must establish a strong compliance management system and continuously monitor RBI notifications, circulars, and regulatory updates to avoid violations and maintain operational stability.

Prudential Norms and Asset Classification

The RBI has prescribed prudential norms for NBFCs to maintain financial discipline and reduce systemic financial risks within the economy. These prudential norms relate to income recognition, asset classification, provisioning requirements, exposure limits, and capital adequacy standards. The objective of these regulations is to ensure that NBFCs properly assess financial risks, maintain transparent financial records, and create adequate reserves against potential loan defaults and losses.

NBFCs are required to classify their financial assets into different categories depending on repayment performance and credit risk. These categories include standard assets, sub-standard assets, doubtful assets, and loss assets. Standard assets are performing assets with regular repayments, whereas doubtful and loss assets indicate higher financial risk and possible default. Provisioning requirements increase as the quality of assets deteriorates, meaning NBFCs must set aside higher financial reserves for risky or non-performing loans. These prudential norms help strengthen financial stability and reduce the chances of sudden financial failures in the NBFC sector.

Capital Adequacy Requirements

NBFCs are required to maintain a minimum Capital to Risk Weighted Assets Ratio (CRAR) as prescribed by the RBI. CRAR is one of the most important financial indicators used to measure the financial strength and stability of an NBFC. It ensures that NBFCs possess sufficient capital reserves to absorb unexpected financial losses and continue their operations without affecting customers, lenders, or investors.

The RBI uses capital adequacy requirements to monitor whether NBFCs are financially strong enough to handle operational risks and credit defaults. If an NBFC fails to maintain the required CRAR, the RBI may impose restrictions, issue corrective directions, or initiate supervisory action against the company. Larger and systemically important NBFCs may face stricter capital adequacy obligations because their financial difficulties can impact the broader financial system and economy.

RBI Regulatory Returns and Filings

NBFCs are required to periodically submit various returns, reports, and compliance filings to the RBI for regulatory supervision and monitoring. These returns help the RBI assess the financial position, operational performance, liquidity status, and compliance standards of NBFCs. Important returns include NBS-1, NBS-2, NBS-9, Asset Liability Management (ALM) returns, branch information returns, and statutory auditor certificates.

Timely filing of these returns is mandatory for all NBFCs. Delayed filing, incorrect reporting, or non-submission of returns may attract monetary penalties and increased regulatory scrutiny from the RBI. These returns also help the RBI identify operational weaknesses, liquidity mismatches, governance concerns, and financial stress within the NBFC sector. Proper compliance with reporting obligations is therefore essential for maintaining transparency and regulatory confidence in NBFC operations.

KYC and Anti-Money Laundering Context

Non-Banking Financial Companies (NBFCs) are treated as “reporting entities” under the Prevention of Money Laundering Act, 2002 (PMLA). Therefore, they are legally required to comply with strict Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations prescribed by the Reserve Bank of India (RBI). These compliance requirements are mainly governed by the RBI Master Direction – KYC, 2016. The primary objective of these regulations is to prevent money laundering, terrorist financing, identity fraud, illegal financial transactions, and misuse of financial systems for criminal activities.

NBFCs are required to conduct Customer Due Diligence (CDD), KYC verification, CKYCR registration, suspicious transaction reporting, record maintenance, Politically Exposed Person (PEP) identification, and beneficial ownership verification. Customer Due Diligence helps NBFCs verify the identity and authenticity of borrowers and customers before establishing financial relationships. Suspicious transactions must be reported to the Financial Intelligence Unit (FIU-IND), while customer records and transaction details must be preserved for prescribed periods. These regulations strengthen transparency, improve financial security, and help regulatory authorities monitor illegal financial activities within the NBFC sector.

Fair Practices Code and Customer Protection

The Reserve Bank of India has made it mandatory for NBFCs to adopt a Fair Practices Code approved by their Board of Directors. The objective of this code is to ensure transparency, fairness, ethical lending practices, and proper customer treatment during all stages of financial transactions. The RBI has increasingly focused on strengthening borrower protection due to rising concerns regarding hidden charges, aggressive recovery methods, unfair lending practices, and customer harassment in the financial sector.

The Fair Practices Code generally covers transparent loan terms, proper disclosure of interest rates, recovery practices, customer grievance handling mechanisms, and non-coercive collection methods. NBFCs are required to clearly communicate loan conditions, repayment obligations, penalties, and interest calculations to borrowers before loan disbursement. The code also restricts unfair recovery methods and encourages respectful interaction with customers during collection procedures. Effective grievance redressal systems must be established to resolve customer complaints promptly. These measures improve customer confidence, promote ethical lending standards, and enhance the overall credibility of the NBFC sector.

Corporate Governance Context

The RBI has significantly strengthened corporate governance norms for NBFCs in recent years due to increasing concerns over financial irregularities, governance failures, operational risks, and systemic financial exposure. Strong governance frameworks are essential to ensure accountability, transparency, proper decision-making, and long-term financial stability within NBFCs. Large and systemically important NBFCs are subject to even stricter governance obligations because their failure may impact the broader financial system.

Governance requirements include board-approved policies, risk management systems, internal controls, audit committees, nomination committees, rotation of auditors, and monitoring of related party transactions. The Board of Directors is expected to actively supervise business operations, compliance functions, risk management practices, and customer protection measures. Internal control systems help detect operational weaknesses, fraud, and compliance failures. Risk management frameworks assist NBFCs in managing credit risk, liquidity risk, operational risk, and cybersecurity threats. These governance norms improve operational discipline and strengthen investor and regulator confidence in NBFC operations.

Statutory Audit and Internal Audit

NBFCs are required to conduct multiple types of audits to ensure compliance with RBI regulations, financial transparency, operational efficiency, and proper governance standards. These audits generally include statutory audits, internal audits, concurrent audits, and information system audits. The purpose of these audits is to identify compliance gaps, financial irregularities, operational weaknesses, and risk exposure within the organization.

Statutory auditors examine financial statements and certify compliance with RBI prudential norms, accounting standards, and regulatory guidelines. Internal audits help evaluate internal control mechanisms, operational processes, and risk management systems. Concurrent audits are conducted on an ongoing basis to monitor financial transactions and operational activities regularly. Information system audits assess cybersecurity frameworks, IT governance systems, and digital infrastructure security. These audits strengthen financial discipline, improve transparency, reduce operational risks, and ensure that NBFCs operate within the legal and regulatory framework prescribed by the RBI.

Information Technology and Cybersecurity Compliance

With increasing digital transformation in the financial sector, the RBI has strengthened cybersecurity and IT compliance requirements for NBFCs. Financial institutions handle sensitive customer and financial data, making them vulnerable to cyberattacks, hacking, and data breaches. Therefore, NBFCs are required to implement strong information security policies, cybersecurity frameworks, data privacy safeguards, IT governance systems, and disaster recovery mechanisms to protect digital operations and customer information.

Digital NBFCs and fintech-linked NBFCs face stricter cybersecurity supervision because of their dependence on online platforms and digital lending systems. The RBI also expects NBFCs to conduct regular security audits, monitor cyber risks, and maintain proper internal IT controls to ensure safe and uninterrupted financial services.

RBI Digital Lending Guidelines

The RBI introduced Digital Lending Guidelines to regulate online lending platforms and improve borrower protection in the digital lending ecosystem. These guidelines were introduced due to increasing complaints regarding hidden charges, unethical recovery methods, and misuse of customer data by certain digital lenders and loan applications.

The guidelines require direct loan disbursement between the borrower and the regulated entity, mandatory disclosure of Annual Percentage Rate (APR), cooling-off periods for borrowers, customer consent mechanisms, and strict data privacy compliance. These reforms aim to increase transparency, prevent unfair lending practices, and strengthen customer protection in digital lending operations.

FEMA and Foreign Investment Compliance

NBFCs receiving foreign investment must comply with FEMA regulations, FDI Policy, pricing guidelines, and RBI reporting requirements. Certain NBFC activities are permitted under the automatic route, while others may require prior government approval depending on the nature of financial activities conducted by the company.

NBFCs must properly report foreign investment transactions, capital infusion, and share allotments within prescribed timelines. Failure to comply with FEMA provisions may result in regulatory action by the RBI and Enforcement Directorate (ED), along with monetary penalties and legal consequences.

Annual Compliance under Companies Act, 2013

Apart from RBI regulations, NBFCs must also comply with annual corporate compliances under the Companies Act, 2013. These compliances help maintain legal validity, transparency, and corporate governance standards within the company.

Annual compliances generally include Annual ROC filings, AGM compliance, board meetings, financial statement filing, director disclosures, and maintenance of statutory registers. Failure to comply with these obligations may result in penalties, additional filing fees, and other legal consequences under corporate law.

RBI Powers to Cancel NBFC Registration

Under Section 45-IA of the RBI Act, the RBI has the authority to cancel the Certificate of Registration (CoR) of an NBFC under certain circumstances. This power is exercised to protect public interest and maintain financial stability within the financial system.

The RBI may cancel registration if the NBFC ceases financial business, fails to maintain the required Net Owned Fund (NOF), violates RBI directions, fails to comply with prudential norms, or operates against public interest. Cancellation of registration can seriously affect business continuity, reputation, and future operations of the NBFC.

Penalties for Non-Compliance

Non-Banking Financial Companies (NBFCs) are required to comply with all regulations, guidelines, and directions issued by the Reserve Bank of India (RBI). Failure to comply with these obligations may result in strict regulatory action. The RBI imposes penalties to maintain financial discipline, ensure transparency, protect borrowers and investors, and strengthen the stability of the financial system.

Recent RBI actions show increasing intolerance toward governance failures, KYC violations, delayed regulatory filings, weak risk management systems, unfair lending practices, and cybersecurity non-compliance. Depending on the seriousness of the violation, the RBI may take the following actions against NBFCs:

Monetary Penalties

The RBI may impose financial penalties on NBFCs for non-compliance with regulatory provisions, delayed filings, incorrect reporting, KYC violations, or failure to follow prudential norms. Repeated violations may result in higher penalties and stricter supervision.

Restrictions on Lending

The RBI may restrict certain business operations of NBFCs, including lending activities, customer onboarding, branch expansion, or digital lending operations. Such restrictions are generally imposed when serious governance or compliance deficiencies are identified.

Cancellation of Certificate of Registration (CoR)

Under Section 45-IA of the RBI Act, the RBI may cancel the Certificate of Registration of an NBFC if it continuously violates regulations, fails to maintain minimum Net Owned Fund (NOF), or operates against public interest. Cancellation can severely impact business continuity and reputation.

Regulatory Investigation

The RBI may initiate inspections, audits, or regulatory investigations if it detects financial irregularities, governance failures, suspicious transactions, or operational risks within an NBFC. These investigations may lead to additional enforcement actions or legal proceedings.

Criminal Penalties in Serious Cases

In serious matters involving fraud, money laundering, illegal financial activities, or intentional regulatory violations, criminal proceedings may also be initiated under applicable laws. Such cases may involve action by the RBI, Enforcement Directorate (ED), Financial Intelligence Unit (FIU), or other regulatory authorities.

Importance of Compliance Management

To avoid penalties and regulatory action, NBFCs must maintain strong governance frameworks, proper internal controls, effective compliance systems, regular audits, and continuous monitoring of RBI regulations. Timely compliance helps protect the reputation, operational stability, and legal standing of the NBFC.

Recent Regulatory Trends and RBI Updates

The Reserve Bank of India (RBI) has recently introduced major reforms to strengthen the regulatory framework for Non-Banking Financial Companies (NBFCs). One of the most important reforms is the Scale-Based Regulatory Framework (SBR), under which NBFCs are classified into Base Layer, Middle Layer, Upper Layer, and Top Layer depending on their size and systemic importance. The RBI has also introduced Digital Lending Guidelines to regulate online lending activities and ensure transparency in loan disbursement, interest disclosure, borrower consent, and data privacy protection. These reforms are aimed at improving customer protection and financial stability in the growing digital lending ecosystem.

The RBI has further strengthened governance norms, cybersecurity requirements, outsourcing regulations, disclosure standards, and fintech supervision mechanisms. NBFCs are now required to implement stronger risk management systems, IT governance frameworks, and customer grievance mechanisms. The regulatory continues evolving rapidly due to digital transformation, fintech expansion, rising cyber risks, and increasing systemic financial exposure within India’s financial sector.

Conclusion

NBFC registration and post-registration compliance in India involve a highly regulated legal framework governed primarily by the Reserve Bank of India. While obtaining the Certificate of Registration is a significant milestone, maintaining ongoing compliance is equally important for long-term sustainability and regulatory protection.

The RBI has substantially strengthened supervision over NBFCs through prudential norms, governance reforms, digital lending regulations, and scale-based supervision. These reforms aim to protect borrowers, maintain financial stability, and improve transparency in the financial system.

Businesses planning to establish an NBFC must therefore adopt a compliance-focused operational model supported by strong governance structures, effective risk management systems, and continuous regulatory monitoring. In today’s evolving financial environment, successful NBFC operations require not only financial expertise but also deep legal and regulatory compliance capabilities.

Frequently Asked Questions (FAQs)

Q1. What is an NBFC?

Ans. A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 2013 that provides financial services such as loans, advances, investments, leasing, or financing activities. NBFCs are regulated by the Reserve Bank of India (RBI) but cannot accept demand deposits like banks.

Q2. Which law governs NBFC registration in India?

Ans. NBFC registration in India is primarily governed by the Reserve Bank of India Act, 1934, especially Section 45-IA. NBFCs must also comply with RBI Master Directions, Companies Act, 2013, FEMA regulations, KYC guidelines, and anti-money laundering laws issued by regulatory authorities.

Q3. Is RBI registration mandatory for NBFC business?

Ans. Yes, RBI registration is mandatory for companies intending to carry on NBFC activities. No company can legally commence financial business without obtaining a Certificate of Registration (CoR) from the RBI and maintaining the prescribed Net Owned Fund requirements.

Q4. What is the minimum Net Owned Fund (NOF) requirement for NBFC registration?

Ans. The RBI has prescribed a minimum Net Owned Fund (NOF) requirement of ₹10 crore for most NBFC categories. NOF generally includes paid-up equity capital and free reserves after deducting accumulated losses and intangible assets.

Q5. What is the “50-50 Test” for NBFC classification?

Ans. Under the RBI’s “50-50 Test,” a company qualifies as an NBFC if more than 50% of its total assets are financial assets and more than 50% of its gross income comes from financial activities.

Q6. What are the common types of NBFCs in India?

Ans. Common NBFC categories include Investment and Credit Companies (ICC), NBFC-MFI, NBFC-Factor, Infrastructure Finance Company (IFC), Housing Finance Company (HFC), Core Investment Company (CIC), NBFC-Account Aggregator, and NBFC-P2P Lending Platforms.

Q7. What documents are required for NBFC registration?

Ans. Important documents include Certificate of Incorporation, MOA and AOA, business plan, director profiles, banker’s report, Net Worth Certificate, financial projections, board resolutions, income tax records, and proof of minimum capital infusion.

Q8. What is the process for NBFC registration?

Ans. The process includes company incorporation, capital infusion, document preparation, filing application through RBI COSMOS portal, submission of physical documents, RBI scrutiny, and grant of Certificate of Registration after successful verification and due diligence.

Q9. What are post-registration compliances for NBFCs?

Ans. Post-registration compliances include RBI returns filing, KYC compliance, anti-money laundering measures, prudential norms, statutory audits, board governance requirements, capital adequacy maintenance, fair practices code implementation, and annual ROC filings.

Q10. What are prudential norms for NBFCs?

Ans. Prudential norms are RBI regulations relating to income recognition, asset classification, provisioning, capital adequacy, and exposure limits. These norms ensure financial discipline, reduce systemic risks, and strengthen the operational stability of NBFCs.