Key RBI Norms You Must Know Before NBFC Registration

Starting a Non-Banking Financial Company (NBFC) in Incensedia is a promising step for anyone looking to enter the financial services industry. NBFCs offer loans, asset finance, peer-to-peer lending, and more—without holding a banking license. But before launching your NBFC, it’s crucial to understand the key norms set by the Reserve Bank of India (RBI).

At Corpbiz, we help entrepreneurs, fintech players, and investors navigate the NBFC registration process with expert legal support. In this blog, we’ll guide you through the essential RBI norms you must follow before registering your NBFC.

Why RBI Norms Are Important for NBFC Registration

The RBI governs and regulates NBFCs to ensure transparency, financial discipline, and customer protection. If you're planning for Online NBFC registration with RBI, these norms act as a foundation for your business.

Failing to comply with them can lead to application rejection or future penalties. So, before jumping into the application process, make sure you’re aware of these basic but critical rules.

Know more - NBFC Registration in India | NBFC License with RBI

1. Minimum Net Owned Fund (NOF) Requirement

One of the first and most important RBI norms is the minimum capital requirement.

• For most NBFCs, the Net Owned Fund (NOF) must be at least ₹10 Crore.

• Earlier, it was ₹2 Crore, but RBI increased it in 2021 to strengthen financial security.

• This capital must be in the form of equity share capital and free reserves.

Your company must maintain this NOF at all times during operations. It's a sign of financial strength and a basic eligibility condition.

2. Company Incorporation Requirement

Before applying for NBFC registration, you must register your business under the Companies Act, 2013 as a:

• Private Limited Company, or

• Public Limited Company

You’ll need to obtain a Certificate of Incorporation (COI) and a valid company PAN. Once the company is registered, you can apply for NBFC registration online with RBI through their portal.

3. Clean Credit and Background Check

The promoters, directors, and shareholders of the proposed NBFC must have:

• A clean credit history (no loan defaults or fraud cases)

• A **good financial background

  **

• No involvement in criminal or money laundering cases

RBI carefully examines your CIBIL score and background to ensure financial integrity. It’s always better to conduct a personal due diligence check before applying.

4. Fit and Proper Criteria

RBI applies a “Fit and Proper” test to all directors and key managerial personnel of the NBFC. This includes:

• Financial soundness

• Integrity and honesty

• Relevant experience in financial services

Only those who pass this test can be appointed as directors. You’ll also need to submit a declaration to that effect.

5. Business Plan Submission

A detailed business plan is mandatory when applying for an NBFC license. Your plan should include:

• Objectives of the NBFC

• Lending and borrowing structure

• Risk management policies

• Technology use (especially for digital NBFCs)

• Revenue and cash flow projections

This is especially important if you’re applying for licenses like:

• [**NBFC Account Aggregator License Online

  **](https://corpbiz.io/nbfc-account-aggregator-license)

• **P2P Lending License Online

  **

• **PPI License Apply Online

  **

RBI wants to ensure your NBFC is viable, tech-driven, and compliant.

6. Fair Practice Code

All NBFCs must follow the Fair Practices Code to protect customer interests. This includes:

• Transparent loan terms

• Proper grievance redressal mechanisms

• No hidden charges

• Ethical collection methods

This is non-negotiable and must be part of your operating framework.

7. Capital Adequacy and Prudential Norms

After registration, NBFCs must maintain certain financial ratios like:

• **Capital Adequacy Ratio (CAR)

  **

• **Asset Classification and Provisioning

  **

• **Exposure Limits

  **

These rules ensure the company remains financially healthy and isn’t overexposed to risky assets.

8. Online Registration Process Through RBI’s COSMOS Portal

The online NBFC registration with RBI happens through the COSMOS portal.

Steps include:

1. Register your company

2. Open a bank account and deposit NOF

3. Submit an online application on COSMOS

4. Upload required documents (MoA, AoA, PAN, business plan, KYC, etc.)

5. RBI reviews your application and may ask for clarification

6. If approved, you’ll receive a Certificate of Registration (CoR)

This process usually takes 90–120 days if everything is in order.

9. Sector-Specific Licenses

Depending on your business model, you may need additional licenses:

• NBFC Account Aggregator License Online – Required if you plan to collect and share financial data of customers.

• PPI License Apply Online – For those providing prepaid payment instruments (wallets, cards).

• P2P Lending License Online – For companies offering peer-to-peer digital lending services.

Each of these licenses has its own eligibility norms, and RBI approval is mandatory.

10. Compliance After Registration

Once you get registered, the responsibility doesn’t end. NBFCs must file regular returns, including:

• Annual returns

• Audited financial statements

• Risk assessment reports

• Periodic RBI returns (NBS-9, DNBS-04)

You may also be required to follow KYC/AML guidelines, cybersecurity norms, and data privacy rules.

FAQs on RBI Norms Before NBFC Registration

**Q1. Is ₹10 Crore capital compulsory for all NBFCs?
**Yes, RBI mandates ₹10 Crore as the minimum NOF for most NBFCs, except Microfinance and CICs which may have separate limits.

**Q2. Can I apply for NBFC registration without a business plan?
**No, a detailed business plan is compulsory and helps RBI assess the sustainability of your model.

**Q3. Can fintech startups get an NBFC license?
**Yes, fintech startups can apply if they meet RBI norms. Many digital lenders and P2P platforms operate as NBFCs.

**Q4. Is Corpbiz helpful in NBFC license application?
**Absolutely. Corpbiz has a team of legal and financial experts who handle the complete NBFC licensing process for clients across India.

**Q5. What if my application is rejected by RBI?
**You’ll need to correct the gaps and reapply. With expert help from Corpbiz, such rejections can often be avoided.

Author’s Note

Written by Atul Shukla – Legal Consultant at Corpbiz

As a regulatory professional, I’ve helped dozens of businesses achieve successful online NBFC registration with RBI. Whether you're applying for an Account Aggregator License, P2P Lending License, or PPI License, understanding RBI’s norms is your first step toward financial success.

Ready to Register Your NBFC? Let Corpbiz Help!

Registering an NBFC can be complex, but with Corpbiz by your side, it becomes a smooth journey. Our team offers:

• End-to-end legal support

• RBI compliance guidance

• Documentation and submission assistance

• Post-registration compliance services

Get in touch with Corpbiz now and take the first step toward launching your NBFC business in India.