RBI FAQs on NBFCs: Registration, Categories, Deposit Rules and Depositor Safeguards
The Reserve Bank of India's FAQ document on Non-Banking Financial Companies (NBFCs), updated as on February 10, 2026, explains who is an NBFC, how such companies are registered and regulated, which of them may take deposits, and how depositors are protected. The key points are set out below.
What is an NBFC and what is "principal business"
An NBFC is a company registered under the Companies Act, 1956 or the Companies Act, 2013 whose main business is loans and advances, acquiring shares, stocks, bonds, debentures or other marketable securities issued by Government or a local authority, leasing, hire-purchase and similar activity. A company whose main business is agriculture, industry, trading in goods (other than securities), providing services, or sale, purchase or construction of immovable property is not an NBFC.
Financial activity counts as principal business under the "50-50 test": financial assets must be more than 50 per cent of total assets (net of intangible assets), and income from financial assets must be more than 50 per cent of gross income. The RBI Act, 1934 does not define the term; the Reserve Bank did so through Press Release 1998-99/1269 dated April 08, 1999.
NBFCs and banks compared
Though NBFCs lend and invest like banks, they differ in three ways:
- they cannot accept demand deposits;
- they are outside the payment and settlement system and cannot issue cheques drawn on themselves;
- depositors of deposit-taking NBFCs do not get the deposit insurance of the Deposit Insurance and Credit Guarantee Corporation (DICGC).
Registration
Under Section 45-IA of the RBI Act, 1934, a company cannot start or carry on the business of a non-banking financial institution without a certificate of registration and without Net Owned Funds (NOF) of ₹10 crore, effective October 01, 2022. New applicants need ₹10 crore from the start; existing NBFCs have until March 31, 2027 to reach it.
Not every financial company falls under the Reserve Bank. Those regulated elsewhere are exempt from RBI registration, including Alternative Investment Funds, merchant banking and stock broking companies registered with SEBI; insurance companies holding an IRDA registration; Nidhi companies notified under the Companies Act, 1956; chit companies as defined in clause (b) of Section 2 of the Chit Funds Act, 1982; and stock exchanges and mutual benefit companies. The exemptions from certain RBI Act provisions are listed in the Reserve Bank of India (Non-Banking Financial Companies - Registration, Exemptions and Framework for Scale Based Regulation) Directions, 2025.
An applicant must:
- be a company incorporated under
Section 3of the Companies Act, 1956 or the corresponding section of the Companies Act, 2013; - hold minimum NOF of ₹10 crore;
- apply on the Reserve Bank's PRAVAAH portal with the documents prescribed in Press Release 2015-2016/2935 dated June 17, 2016.
Higher NOF applies to specialised categories: NBFC-Infrastructure Finance Company and Infrastructure Debt Fund-NBFC, ₹300 crore each; Mortgage Guarantee Company, ₹100 crore; Housing Finance Company, ₹20 crore; Standalone Primary Dealers undertaking only core activities, ₹150 crore, and those also doing non-core activities, ₹250 crore; NBFC-AA and NBFC-P2P, ₹2 crore each.
Categories of NBFCs
Classification is by liabilities (deposit-accepting or non-deposit), by regulatory layer under Scale Based Regulation (Base, Middle, Upper and Top Layer), and by activity. By activity, the FAQs list: