Compliance
NBFC registration and the Certificate of Registration: what RBI requires, and what changes the day it arrives
CS Manoj Famra · 2026-10-09 · 9 min read (estimated)
Registration is treated as the finish line and it is the starting gun. The Certificate of Registration does not certify that you may lend — a company could lend without one, which is exactly why section 45-IA exists — it certifies that you are now a supervised entity, with returns, a layer, prudential norms and an inspection. Most of the cost of being an NBFC begins on the day the CoR is granted, and very little of it is in the application.
So this page covers the application, and then the part nobody budgets for.
First: do you actually need to register?
Two tests, and they are separate.
The principal business test — the "50-50 test". The Reserve Bank's own FAQ, All you wanted to know about NBFCs (updated as on 15 September 2026), puts it as two limbs that must both be satisfied: financial assets must be more than 50% of total assets (net of intangible assets), and income from financial assets must be more than 50% of gross income. A company that fails either limb is not carrying on the business of a non-banking financial institution, and registration does not arise.
The test is of assets and income, not of intention. A company that plans to lend but has not yet is tested on what its balance sheet says.
And then: are you exempt? A number of entities are outside RBI registration to avoid dual regulation. Per the same FAQ, these include entities regulated by other regulators — SEBI-registered Alternative Investment Funds, merchant bankers and stockbrokers; insurance companies holding an IRDA certificate; Nidhi companies; chit companies under the Chit Funds Act, 1982; stock exchanges and mutual benefit companies.
There is also a quieter exemption worth knowing: "Unregistered Type I NBFCs" — companies with no public funds, no customer interface, and asset size under ₹1,000 crore — are exempt from registration under section 45-IA.
That Nidhi companies are exempt is not a detail. A Nidhi is regulated under the Nidhi Rules, 2014 and funds itself from its members' deposits; it is a different animal from an NBFC and it is not a cheaper route to the same thing.
The capital requirement, and the deadline that is now close
The Reserve Bank's FAQ states a minimum Net Owned Fund of ₹10 crore with effect from 1 October 2022, and — for NBFCs already holding a Certificate of Registration — that "existing NBFCs have timeline upto March 31, 2027 to attain NOF of ₹10 crore."
Two things follow.
For a new applicant, ₹10 crore is the number now. The glide path is for existing registrants, not for applications.
For an existing NBFC below ₹10 crore, 31 March 2027 is about five months away from the date of this page. The intermediate milestone on the way to it — widely reported as ₹5 crore by 31 March 2025 for NBFC-ICCs — I have not verified from the gazette notification, and secondary sources disagree on the equivalent figure for NBFC-Factors. The ₹10 crore endpoint and the March 2027 date are from the Reserve Bank's own FAQ; the interim step should be checked against the notification before you plan a capital raise on it.
Specialised categories have their own floors. The FAQ gives ₹300 crore for an NBFC-IFC and ₹20 crore for an HFC. There are others; check your category rather than assuming ₹10 crore.
How the application is made
The FAQ is specific and it is one of the things that has changed: the applicant "shall submit an application on PRAVAAH portal of Reserve Bank", together with the documents prescribed in the Reserve Bank's 2016 press release on the subject.
The requirements it names are short:
- The applicant must be a company incorporated under the Companies Act — 1956 or 2013.
- It must meet the minimum Net Owned Fund requirement for its category.
- The application and prescribed documents go to the Reserve Bank, via PRAVAAH.
If a guide tells you to file a physical application or to use the old COSMOS application route, it predates PRAVAAH. This is the commonest staleness in registration content.
On how long it takes: the Reserve Bank does not publish a service-level timeline for granting a CoR, and I am not going to invent one. Figures circulating in advisory content are practice observations rather than published commitments, and they vary by an order of magnitude. Plan the capital and the documents; do not plan the date.
What changes the day the CoR arrives
This is the part the application-focused guides leave out, and it is where the real cost sits.
You acquire a layer. The Master Direction — Reserve Bank of India (Non-Banking Financial Company — Scale Based Regulation) Directions, 2023 (RBI/DoR/2023-24/106, DoR.FIN.REC.No.45/03.10.119/2023-24, dated 19 October 2023, updated as on 17 July 2025) places every NBFC in a layer, and the layer decides how much regulation applies. A new registrant is normally Base Layer. See NBFC category and layer — the category says what you do, the layer says how much supervision you get, and you carry one of each.
You acquire returns. From the first reference date after registration. Under the Master Direction — Reserve Bank of India (Filing of Supervisory Returns) Directions, 2024 (RBI/DoS.DSG/2023-24/110, 27 February 2024), a Base Layer NBFC files DNBS02 quarterly within 21 days of each quarter end, DNBS13 quarterly including a NIL return where there are no overseas investments, and Form A annually on auditor appointment. That is a modest set and it is not zero, and the NIL return is the one new registrants miss. Full list: RBI returns for NBFCs.
You acquire a KYC regime. The Non-Banking Financial Companies — Know Your Customer Directions, 2025, dated 28 November 2025 (RBI/DOR/2025-26/361), apply to all categories of NBFC across all layers unless otherwise specified, and do not apply to an NBFC with no customer interface. They were amended on 29 December 2025 (RBI/2025-26/160). A KYC policy drafted from a pre-November-2025 template is drafted from a superseded text. I was not able to confirm from the 2025 Directions' own repeal clause whether the 2016 NBFC KYC direction was expressly repealed — the Reserve Bank's repeal of the equivalent commercial bank direction on the same date is clearly documented. Confirm before citing a repeal.
You acquire asset classification. Computed in the day-end process for the relevant date, and an NPA is upgraded only on payment of the entire arrears of interest and principal — RBI/2021-2022/125, dated 12 November 2021. This is the obligation most often discovered late, because it has no filing date attached to it: it is a thing your books must be able to do every single night. What that means in practice.
You acquire disclosure duties to the borrower. A Key Facts Statement, with an APR computed on a prescribed basis — the KFS requirement and what goes into the APR. And penal amounts are charges, not interest, and may not be capitalised — penal charges are not interest.
And the loss of the Section 45-IA(6) safety net. Non-compliance can lead to cancellation of the Certificate of Registration. The CoR is not a one-time grant; it is a permission that can be withdrawn, which is the real reason the obligations above are not optional.
The order most people get wrong
Not a regulatory requirement — an observation from doing this.
- Settle the category before the capital. ₹10 crore is the ICC/MFI/Factor floor; an IFC is
₹300 crore. Raising to the wrong number is an expensive way to discover your category.
- Check the exemptions before the application. If you are a Nidhi, a chit company or an
unregistered Type I, the application is the wrong document.
- Build the day-end before the first quarter end. The returns are a filing and can be done
late at some cost. Asset classification is a nightly computation, and a book that has not been classified since registration cannot be classified retrospectively in a way that survives examination.
Sourcing
The 50-50 test, the Net Owned Fund figure and its 2027 timeline, the PRAVAAH application route, the exemptions and the Unregistered Type I carve-out are all from the Reserve Bank's own FAQ, All you wanted to know about NBFCs, updated as on 15 September 2026. The Directions cited each carry their notification number and date.
Flagged above and repeated here: the interim NOF milestone and the repeal status of the 2016 NBFC KYC direction are the two points I could not verify from primary text, and both are marked where they appear. The CoR processing timeline is not published by the Reserve Bank and is not stated here.
Written 9 October 2026.
Frequently asked questions
What is the 50-50 test?
Both limbs must be satisfied: financial assets more than 50% of total assets net of intangibles, and income from financial assets more than 50% of gross income. It is a test of the balance sheet and the profit and loss account, not of intention.
What Net Owned Fund does a new NBFC need?
Rs 10 crore, with effect from 1 October 2022, for an NBFC-ICC, MFI or Factor. The glide path to 2027 is for NBFCs already holding a Certificate of Registration, not for new applications. Specialised categories differ — an NBFC-IFC is Rs 300 crore.
How is the application made?
On the Reserve Bank's PRAVAAH portal, with the documents prescribed in the Reserve Bank's 2016 press release. A guide that tells you to file physically, or through the old application route, predates PRAVAAH.
Do Nidhi companies need RBI registration?
No. Nidhi companies are among the entities exempt from registration to avoid dual regulation, along with SEBI-regulated entities, insurers holding an IRDA certificate and chit companies under the Chit Funds Act, 1982. A Nidhi is regulated under the Nidhi Rules, 2014.
How long does a Certificate of Registration take?
The Reserve Bank does not publish a service-level timeline, and figures circulating in advisory content are practice observations rather than commitments. Plan the capital and the documents.
Related: NBFC compliance checklist · NBFC compliance calendar · RBI returns for NBFCs · Scale based regulation layers · NBFC layer finder
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