Non-Banking Financial Companies (NBFCs) play a very important role in India's financial system. They help people and businesses get access to loans, investment options, and financial services without always going through banks. However, since they deal with public money, they must follow certain rules and guidelines set by the Reserve Bank of India (RBI).
In this blog, we will explain the RBI guidelines for NBFC compliance in simple words. We will also cover some important topics such as Online NBFC Registration in India, how to apply for an account aggregator license, P2P lending license online, and Online PPI license in India.
What is NBFC Compliance?
NBFC compliance means following the rules, regulations, and reporting requirements given by the RBI. These rules are made to ensure that NBFCs operate safely, transparently, and in the best interest of the public. Compliance includes proper registration, regular audits, maintaining capital, reporting financials, and protecting customer data.
RBI Guidelines for NBFC Compliance
The RBI has issued a framework to regulate NBFCs based on their size, risk, and activity. The latest framework is called the Scale-Based Regulation (SBR). Let’s understand the main guidelines under this:
1. Classification of NBFCs
RBI has grouped NBFCs into four layers:
Base Layer: Small NBFCs with limited risk. Examples: NBFC-Peer to Peer Lending Platforms (NBFC-P2P), NBFC-Account Aggregators.
Middle Layer: Larger NBFCs with more risk. Examples: NBFC-Factor, NBFC-Loan Companies.
Upper Layer: Very large NBFCs that are systemically important.
Top Layer: This layer is currently empty but may include very risky entities in the future.
Each layer has specific compliance requirements.
2. Minimum Net Owned Funds (NOF)
To register as an NBFC, a company must have a minimum Net Owned Fund:
₹10 crore for most NBFCs (Loan Companies, Investment Companies)
₹2 crore for NBFC-Micro Finance Institutions (NBFC-MFIs)
₹5 crore for NBFC-Factors
₹2 crore for NBFC-Account Aggregators
3. Registration with RBI
To operate as an NBFC in India, a company must get a certificate of registration (CoR) from the RBI. This is the first step in Online NBFC Registration in India.
The process includes:
Incorporating a company under the Companies Act
Ensuring minimum NOF
Preparing a business plan
Submitting an online application to the RBI
Fulfilling RBI’s due diligence and documentation process
4. Capital Adequacy
NBFCs must maintain a certain Capital to Risk-weighted Assets Ratio (CRAR). It ensures that they have enough capital to absorb potential losses.
As per RBI:
The minimum CRAR for NBFCs is 15%
Tier-I capital should be at least 10%
5. Asset Classification and Provisioning
NBFCs must classify loans based on repayment status:
Standard Asset: No default
Substandard Asset: Default for 3 to 12 months
Doubtful Asset: Default for more than 12 months
Loss Asset: Unrecoverable loans
NBFCs must set aside money (provisioning) for bad loans.
6. Audits and Returns
NBFCs must:
Submit regular returns to RBI (like NBS-1, NBS-2, etc.)
Appoint statutory auditors
Maintain proper books of accounts
Conduct internal and external audits
7. KYC and Anti-Money Laundering (AML)
NBFCs must follow Know Your Customer (KYC) guidelines. They must verify the identity of their customers and report any suspicious transactions to the Financial Intelligence Unit (FIU).
8. Fair Practices Code
NBFCs must follow fair practices while lending:
Clear terms and conditions
No hidden charges
Transparent loan agreements
Fair recovery practices
Apply Account Aggregator License
An Account Aggregator (AA) is an RBI-regulated NBFC that helps individuals share their financial data securely with financial service providers. This is done with the customer’s consent.
Steps to Apply for Account Aggregator License:
Incorporate a company under the Companies Act
Maintain minimum NOF of ₹2 crore
Prepare a business model around data aggregation
Apply online at RBI’s portal
Submit documents and wait for RBI’s approval
AA is a fast-growing model and promotes digital finance in India.
P2P Lending License Online
Peer-to-Peer (P2P) Lending Platforms connect borrowers with lenders directly through an online platform. These platforms must register as NBFC-P2P with the RBI.
How to Get a P2P Lending License Online:
Set up a company with minimum NOF of ₹2 crore
Prepare a technology-based lending platform
Apply for NBFC-P2P license online
Submit all documents such as business plan, software architecture, financial projections, etc.
Wait for RBI’s inspection and approval
NBFC-P2Ps must also follow strict KYC, data protection, and reporting norms.
Online PPI License in India
A Prepaid Payment Instrument (PPI) license is given by RBI to companies that offer wallets, prepaid cards, etc. These tools allow users to load money and make payments easily.
Steps to Get an Online PPI License in India:
Incorporate a company in India
Maintain NOF of ₹15 crore initially and ₹25 crore after 3 years
Apply for PPI license to RBI with business plan
Submit compliance documents (KYC norms, data security policy, etc.)
RBI will review and grant the PPI license
Companies like Paytm, PhonePe, and MobiKwik operate with PPI licenses.
Why Is RBI Compliance So Important for NBFCs?
Following RBI guidelines is not just a formality – it builds trust. NBFCs deal with public funds, so transparency and safety are a must. Non-compliance can lead to penalties, license cancellation, and loss of reputation.
Compliance also:
Builds customer confidence
Improves loan recovery rates
Helps secure funding and partnerships
Ensures long-term sustainability
Final Words
NBFCs in India are growing rapidly, offering services in lending, wealth management, digital payments, and more. But this growth must be backed by strong compliance with RBI guidelines. Whether you are planning to start an NBFC, offer Account Aggregator services, set up a P2P lending platform, or launch a Prepaid Wallet, make sure you follow RBI’s rules carefully.
Online NBFC Registration in India is now easier with digital filing and transparent systems. But expert help is always advised to avoid mistakes. Staying compliant is not just a rule – it's the foundation of a trustworthy financial business.
