Overview - NBFC Takeover
Navigating the complexities of NBFC takeovers and compliance requires expertise, precision, and a deep understanding of regulatory frameworks. At GenZCFO, we specialize in simplifying the process, ensuring a seamless transition for businesses looking to acquire, manage, or restructure an NBFC.
With evolving RBI guidelines and stringent compliance requirements, having the right advisory team is crucial. Our expert professionals handle everything—from due diligence and financial structuring to regulatory approvals and post-takeover compliance—so you can focus on growing your business.
Backed by industry experience and a commitment to accuracy, we ensure that every NBFC transaction is legally sound, financially optimized, and fully compliant with RBI, SEBI, and MCA regulations. Whether you’re an investor, fintech startup, or an existing NBFC looking for strategic growth, we provide end-to-end support tailored to your needs.
Our Services
Expert-led assistance in acquiring an NBFC, ensuring a smooth and compliant transition.
Due Diligence & Documentation
Thorough evaluation of financials, compliance history, and legal aspects with seamless documentation support.
RBI Approval & Legal Assistance
End-to-end support in obtaining RBI approval and handling legal formalities for a hassle-free acquisition.
Financial Structuring & Risk Assessment
Customized financial planning, risk evaluation, and capital structuring to optimize your takeover.
Post-Takeover Compliance
Ongoing regulatory support, reporting, and compliance management to ensure smooth operations post-acquisition.
Types of NBFC Takeover
NBFC takeovers can be of many types, but mainly fall into two categories. The classification depends on the nature of the acquisition and regulatory requirements. Understanding these categories is crucial for ensuring a smooth transition and full compliance with RBI norms.
Apart from these, takeovers can also be classified based on their purpose, such as -
- Strategic Takeover- A financial institution or corporate entity acquires an NBFC to expand services, strengthen market presence, or gain regulatory licenses.
- Financial Takeover- Investment firms or private equity groups acquire an NBFC for financial gains, aiming to restructure and increase its valuation.
- RBI-Mandated Takeover- The RBI enforces a takeover due to non-compliance, financial instability, or governance issues to safeguard financial operations.
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Points to Consider Before NBFC Takeover
Acquiring an NBFC requires careful evaluation to ensure compliance, financial viability, and strategic alignment. Here are key factors to consider before proceeding with an NBFC takeover:
1. Background Verification
- Conduct due diligence on the NBFC’s financial history, management efficiency, and operational integrity.
- Review its compliance history with RBI regulations to identify potential risks.
2. Define Your Goals
- Establish your financial objectives and ensure they align with the NBFC’s potential.
- Assess whether the takeover fits into your long-term business strategy.
3. Explore the Market
- Conduct market research to evaluate available acquisition opportunities.
- Shortlist NBFCs that align with your business model and future goals.
4. Assess Financial Stability
- Analyze both your financial readiness and the target NBFC’s financial position.
- Evaluate cash flow and financing options to determine the feasibility of the acquisition.
Benefits of NBFC Takeover
✓ Faster Market Entry – Acquire an existing NBFC and bypass the lengthy licensing process.
✓ Regulatory Advantage – Leverage an RBI-registered NBFC to start financial operations immediately.
✓ Established Customer Base – Gain access to an existing clientele, reducing customer acquisition costs.
✓ Operational Infrastructure – Benefit from a pre-existing business setup, including compliance frameworks & financial systems.
✓ Business Expansion – Expand into financial services without starting from scratch.
✓ Increased Profitability – Generate revenue from an already operational entity with an established market presence.
✓ Reduced Compliance Hassle – Avoid the complex process of registering a new NBFC and adhere to existing compliance structures.
Eligibility Criteria for NBFC Takeover
Acquiring an NBFC in India involves meeting specific regulatory and financial requirements set by the Reserve Bank of India (RBI). Here are the key eligibility requirements for an NBFC takeover:
1. Parties Involved
NBFC takeovers primarily involve two entities
- Acquirer Company – The company or individual seeking to acquire an NBFC. The acquirer must be authorized by RBI to purchase or transfer shares of the target company.
- Target Company – The NBFC being acquired. It must be registered under the Companies Act, 2013 and hold a valid NBFC Certificate of Registration (COR).
2. Capital Requirement
- The minimum Net Owned Fund (NOF) required for the acquiring NBFC is ₹10 crores.
- Additionally, as per RBI’s Scale-Based Regulations, the acquirer must have NOF ₹10 crores (for NBFC-ICC, NBFC-MFI & NBFC factors) to meet operational and compliance requirements.
3. Positive Net Owned Funds
The target NBFC must maintain positive net owned funds to ensure financial stability before acquisition.
4. NBFC Asset Classification
Under RBI’s Asset Liability Management (ALM) system, the target NBFC must maintain proper asset classification as per regulatory guidelines.
5. Fit and Proper Criteria
The acquiring entity must meet the RBI’s Fit and Proper Criteria, ensuring the financial integrity, experience, and credibility of the new management.
6. Public Notice for Management Change
If the takeover involves a change in ownership or management control, a public notice must be issued in
- One national newspaper and one local newspaper
- At least 30 days before the sale or transfer of shares
The public notice must include
- Intent to sell or transfer ownership
- Details of the transferee
- Reason for the sale or transfer
Documents Required for NBFC Takeover in India
- ✓ Directors and Shareholders information;
- ✓ Non-criminal & non-conviction (u/s 138 of NI Act) Statement;
- ✓ PAN Number;
- ✓ Company’s legal documents;
- ✓ Bankers’ report;
- ✓ KYC documents;
- ✓ Declaration of association and non-association;
- ✓ NBFC business plan
- ✓ 3 years’ financial statement;
- ✓ Acquirer’s source of capital
- ✓ Due diligence report;
- ✓ Registered Business Address
- ✓ Directors’ Identification Number
- ✓ Other statutory information about the company
NBFC Takeover Process in India
Acquiring an NBFC involves a step-by-step procedure governed by RBI regulations to ensure compliance and smooth business transition. Below is a structured approach to executing an NBFC takeover:
- Assessment of financial health and liabilities
- Review of compliance history with RBI regulations
- Verification of assets and legal standing
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Mandatory Compliance for NBFC Takeover
To ensure a legally compliant and seamless NBFC acquisition, businesses must adhere to RBI’s regulatory framework. The following are the key compliance requirements:
1. Adherence to NBFC Takeover Regulations
- Companies Act, 2013 – Ensuring corporate governance and regulatory oversight.
- Non-Banking Financial Companies Directions, 2015 – Guidelines on ownership transfer and management changes.
2. RBI Approval Compliance
Prior approval from RBI is mandatory in the following cases:
- Increase in shareholding by 26% or more over time.
- Change in more than 30% of the Board of Directors (BOD) status.
- Acquisition of shares resulting in control transfer of the NBFC.
- Amalgamation or merger with another financial entity.
- Conversion of an NBFC into a bank.
3. When RBI Approval is Not Required
- Change in up to 30% of BOD, excluding independent directors.
- Buyback or reduction of up to 26% shares/capital, if approved by a competent court.
Consequences of Non-Compliance
Failure to comply with RBI’s NBFC takeover guidelines can lead to strict regulatory action, including:
- Cancellation of NBFC Registration Certificate
- Financial penalties and legal repercussions
- Operational restrictions imposed by RBI
Why Choose Us for Your NBFC Takeover?
Some FAQs That GenZCFO Often Get Asked
An NBFC takeover refers to the acquisition of a Non-Banking Financial Company (NBFC) by another entity, involving a change in ownership, management, or control, subject to RBI regulations.
Yes, prior RBI approval is mandatory in cases involving significant shareholding changes, management restructuring, or mergers. However, some minor changes may not require RBI approval.
Yes, the acquiring entity must provide income proof, financial statements, and source of funds details to comply with RBI’s due diligence and regulatory requirements.
Some common challenges include:
- Regulatory approvals and compliance
- Due diligence complexities
- Valuation disputes
- Integration of operations and risk assessment
- Market and competition factors
NBFCs continue to play a crucial role in financial inclusion and credit expansion, with growing opportunities in digital lending, SME financing, rural banking, and fintech collaborations. The RBI’s evolving framework is further expected to enhance transparency and market growth.
The timeline depends on factors like due diligence, RBI approvals, compliance formalities, and financial structuring. On average, the takeover process takes 5 to 6 months.
A professional consultancy ensures regulatory compliance, smooth execution, risk mitigation, accurate valuation, and strategic planning, making the takeover process hassle-free.