Non-Banking Financial Company
Aspiring financial institutions can leverage our end-to-end solutions to establish Non-Banking Financial Companies, from RBI registration and structuring to operational setup and regulatory compliance.
Introduction & Regulatory Background
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A Non-Banking Financial Company (NBFC) provides financial services similar to banks but without a banking license. RBI governs NBFCs under the Scale-Based Regulatory (SBR) framework to ensure systemic stability.
Registration under Section 45-IA of the RBI Act, 1934 is mandatory for any entity carrying out 'Principal Business' of financial activity.
Entity Requirement: Only a company registered under the Companies Act (Public or Private) can apply to RBI for a Certificate of Registration.
How NBFCs differ from Banks.
Registration under Section 45-IA of the RBI Act, 1934 is mandatory for any entity carrying out 'Principal Business' of financial activity.
NBFCs cannot accept demand deposits (savings / current accounts).
NBFCs do not form part of the payment and settlement system.
NBFCs cannot issue cheques drawn on themselves.
DICGC deposit insurance facility is not available to NBFC depositors.
Types of NBFC (SBR Framework)
Base Layer (NBFC-BL)
The Base Layer shall comprise:
Non-deposit taking NBFCs (NBFCs-ND) having an asset size of less than ₹1,000 crore
Middle Layer (NBFC–ML)
The Middle Layer shall consist of:
All deposit-taking NBFCs (NBFCs-D), irrespective of their asset size;
Non-deposit taking NBFCs (NBFCs-ND) having an asset size of ₹1,000 crore and above.
Upper Layer (NBFC–UL)
The Upper Layer shall comprise those NBFCs which are specifically identified by the Reserve Bank of India as warranting enhanced regulatory requirements, based on a prescribed set of parameters and a scoring methodology reflecting their systemic risk profile.
Top Layer (NBFC–TL)
The Top Layer shall consist of:
The Top Layer shall ideally remain empty.
This layer may be populated if the Reserve Bank is of the opinion that there is a substantial increase in potential systemic risk emanating from certain NBFCs in the Upper Layer.
Such NBFCs shall be migrated from the Upper Layer to the Top Layer and shall be subject to significantly enhanced regulatory and supervisory requirements.
Principal Business Criteria: The 50-50 Test
RBI applies thefollowing threshold to determine if a company's principal activity is financial orotherwise. Both criteria must be fulfilled simultaneously for a company to qualifyfor NBFC registration.
Asset Test
Financial assets must constitute more than 50 per cent of the total assets (netted off by intangible assets).
Income Test
Income from financial assets must constitute more than 50 per cent of the gross income.
Eligibility & Net Owned Fund
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Net Owned Fund
Rs. 10 Crore
Minimum requirement for base layer NBFC registration.
Infrastructure
Dedicated office space and secure IT infrastructure
Robust system for reporting and internal controls
Separate compliance function and record-keeping
Key Personal Requirements
Principal Officer
Professional qualifications
8-10+ years experience in banking/ NBFC
Compliance Officer
Minimum NOF Requirements
Standard NBFC (Base Layer)
₹10 Crore
Infrastructure Finance (IFC)
₹300 Crore
Infrastructure Debt Fund (IDF)
₹300 Crore
Mortgage Guarantee (MGC)
₹100 Crore
SPD (core activities only)
₹150 Crore
SPD (core + non-core activities)
₹250 Crore
Mortgage Guarantee (MGC)
₹100 Crore
Housing Finance (HFC)
₹20 Crore
NBFC- Account Aggregator (AA)
₹2 Crore
NBFC- Peer to Peer (P2P)
₹2 Crore
NBFC not availing public funds and having no customer interface
₹2 Crore
How SecMark Assists
Advising on entity structure for RBI registration, net worth infusion and management team setup.
Advising on qualification and experience requirements for obtaining the NBFC license.
Assisting in preparation of regulatory documents including business plans, IT policy and AML frameworks.
Assisting in filing the RBI application through the COSMOS/CIMS portal.
Handling and responding to regulatory queries raised by the Reserve Bank of India.
Getting the final Certificate of Registration (CoR).
Designing operational policies, procedures and internal control systems in line with RBI norms.
Assisting in setting up post-license reporting and compliance operations.
