The financial sector in India is growing rapidly, and Non-Banking Financial Companies (NBFCs) play a big role in it. They provide loans, credit, investment opportunities, and financial products to people and businesses who may not always have easy access to banks. However, to ensure fair practices and protect customers, the Reserve Bank of India (RBI) has laid down strict compliance norms for NBFCs.

If you are planning to  apply for an NBFC License in India  or are already running an NBFC, it is important to understand these compliance rules.

Why RBI Compliance Norms Are Important for NBFCs

RBI compliance norms help in:

• Protecting customer interests.
  
  
• Maintaining financial stability in the market.
  
  
• Preventing fraud and mismanagement.
  
  
• Building trust in NBFCs as reliable financial institutions.
  
  

In simple words, compliance is not just about following rules—it's about ensuring the NBFC is safe, transparent, and trustworthy.

Key RBI Compliance Norms for NBFCs

1. Minimum Net Owned Fund (NOF) Requirement

Every NBFC must maintain a minimum net owned fund of ₹10 crore (earlier ₹2 crore for some categories). This ensures that the NBFC has a strong financial base before it can lend or invest.

2. Fair Practices Code (FPC)

NBFCs must follow a fair practices code, which ensures that customers are treated fairly. This includes transparent loan terms, clear interest rates, and no hidden charges.

3. Asset Classification and Provisioning

Like banks, NBFCs must classify their assets (performing and non-performing). Non-performing assets (NPAs) are loans where payments are overdue. RBI requires NBFCs to make provisions (reserves) against such risky loans to avoid losses.

4. Capital Adequacy Ratio (CAR)

NBFCs must maintain a minimum Capital to Risk-Weighted Assets Ratio (CRAR) of 15%. This means they should have enough capital to cover possible losses and keep operations safe.

5. Annual and Periodic Returns

NBFCs must file various returns with RBI regularly, such as:

• NBS-1 (quarterly return)
  
  
• NBS-2 (quarterly return for prudential norms)
  
  
• NBS-3 (quarterly return on liquid assets)
  
  
• Statutory Auditor’s Certificate
  
  

These returns help RBI monitor the financial health of NBFCs.

6. Corporate Governance Norms

NBFCs are expected to follow corporate governance standards. This means:

• Appointing a fit and proper Board of Directors.
  
  
• Setting up audit committees.
  
  
• Following transparent decision-making processes.
  
  

7. KYC and Anti-Money Laundering (AML) Rules

NBFCs must strictly follow the Know Your Customer (KYC) and Anti-Money Laundering guidelines. This helps in preventing fraud, identity theft, and illegal transactions.

8. RBI’s New Scale-Based Regulations (SBR)

RBI recently introduced scale-based regulations that classify NBFCs into four categories:

• Base Layer
  
  
• Middle Layer
  
  
• Upper Layer
  
  
• Top Layer
  
  

Each layer has different compliance requirements based on the size and importance of the NBFC.

Special Licenses Under RBI for NBFCs

Apart from the general NBFC license, there are other specialized licenses you can apply for under RBI’s framework:

1. Apply for RBI Account Aggregator License in India

An Account Aggregator (AA) collects and shares financial data securely with customer consent. To operate as an AA, NBFCs need RBI approval. This NBFC Account Aggregator (AA) license helps in building digital financial ecosystems.

2. Apply for P2P Lending License in India

Peer-to-Peer (P2P) lending platforms connect borrowers directly with lenders. To run such a platform, you must apply for a P2P lending license in India under RBI regulations. Compliance ensures safety for both investors and borrowers.

3. Apply for a PPI License in India

Prepaid Payment Instruments (PPIs), like mobile wallets and prepaid cards, are widely used today. To operate in this space, NBFCs must apply for a PPI license in India. This ensures digital payment solutions follow RBI’s security and transparency norms.

Penalties for Non-Compliance

If NBFCs fail to follow RBI compliance norms, they may face:

• Monetary penalties.
  
  
• Restrictions on business activities.
  
  
• Cancellation of NBFC license.
  
  

Hence, compliance is not optional but mandatory for survival and growth.

How Corpbiz Can Help

At Corpbiz, we understand that RBI compliance can feel complex and overwhelming. Our experts help businesses to:

• Apply for an NBFC License in India smoothly.
  
  
• Assist in RBI Account Aggregator license applications.
  
  
• Guide through the process of P2P lending license and PPI license applications.
  
  
• Ensure your NBFC follows every RBI compliance norm without stress.
  
  

FAQs on RBI Compliance for NBFCs

Q1. Is RBI registration mandatory for all NBFCs? Yes, all NBFCs must be registered with the RBI to operate legally in India.

Q2. What happens if an NBFC does not follow RBI norms? It may face penalties, restrictions, or even cancellation of its license.

Q3. Can an NBFC apply for multiple licenses? Yes, depending on the services offered, NBFCs can apply for Account Aggregator, P2P Lending, or PPI licenses.

Q4. Who regulates NBFCs apart from RBI? While RBI is the primary regulator, certain NBFCs may also fall under SEBI, IRDAI, or other sector-specific regulators.

Q5. How can Corpbiz help in NBFC compliance? Corpbiz provides end-to-end assistance in licensing, compliance filing, and regulatory support for NBFCs.

Author Profile

Atul Shukla  is a business and legal expert associated with Corpbiz. He specializes in RBI compliance, NBFC registration, and financial licensing. With years of expertise, he helps businesses stay compliant while growing in India's fast-changing financial sector.