{"id":14380,"date":"2026-05-27T07:42:14","date_gmt":"2026-05-27T07:42:14","guid":{"rendered":"https:\/\/lemonn.co.in\/blog\/glossary\/nbfc-regulations\/"},"modified":"2026-05-27T07:42:14","modified_gmt":"2026-05-27T07:42:14","slug":"nbfc-regulations","status":"publish","type":"glossary","link":"https:\/\/lemonn.co.in\/blog\/glossary\/nbfc-regulations\/","title":{"rendered":"NBFC Regulations"},"content":{"rendered":"

NBFC (Non-Banking Financial Company) regulations in India are issued by the Reserve Bank of India under the RBI Act, 1934. They govern the registration, operations, capital requirements, and prudential norms for NBFCs, which provide credit and financial services outside the traditional banking sector<\/a>.<\/p>\n

What Are NBFC Regulations<\/a>?<\/h2>\n

An NBFC is a company registered under the Companies Act that is in the business of lending, investing, leasing, or accepting deposits (for certain categories). NBFCs cannot accept demand deposits (like savings or current accounts) but play a major role in consumer finance, MSME credit, infrastructure financing, and microfinance.<\/p>\n

RBI’s Classification of NBFCs<\/h2>\n

**By deposit-taking status:**
\n– NBFC-D (Deposit taking): can accept public deposits; stricter regulations
\n– NBFC-ND (Non-Deposit taking): cannot accept public deposits<\/p>\n

**By activity:**
\n– NBFC-MFI: Microfinance institutions
\n– NBFC-HFC (Housing Finance Company): housing loans
\n– NBFC-CIC (Core Investment Company): holding companies for group investments
\n– IFC (Infrastructure Finance Company): infrastructure project lending
\n– NBFC-ND-SI: systemically important non-deposit taking NBFCs (asset size Rs 500 crore+)<\/p>\n

Key Regulatory Requirements<\/h2>\n

– **Minimum Net Owned Fund (NOF)**: Rs 10 crore for new NBFC registration
\n– **Capital Adequacy Ratio (CAR)**: minimum 15% for NBFCs
\n– **Asset classification**: NPA recognition at 90 days overdue (same as banks)
\n– **Registration**: all NBFCs with asset size above Rs 100 crore must be registered with RBI
\n– **Returns filing**: quarterly and annual returns to RBI<\/p>\n

Scale-Based Regulation (SBR)<\/h2>\n

In 2021, RBI introduced Scale-Based Regulation, dividing NBFCs into four layers (Base, Middle, Upper, Top) based on size and systemic importance, with progressively stricter norms for larger NBFCs.<\/p>\n

Key Takeaways<\/h2>\n

– NBFCs are RBI-regulated non-bank lenders that provide credit, leasing, and investment services
\n– Cannot accept demand deposits; limited deposit-taking allowed for select categories
\n– Classified by activity (MFI, HFC, infrastructure) and deposit-taking status
\n– Capital adequacy, NPA recognition, and prudential norms broadly align with bank regulations
\n– Scale-Based Regulation (2021) introduced tiered oversi<\/a>ght proportional to NBFCs’ size and systemic risk<\/p>\n","protected":false},"excerpt":{"rendered":"

NBFC (Non-Banking Financial Company) regulations in India are issued by the Reserve Bank of India under the RBI Act, 1934. They govern the registration, operations, capital requirements, and prudential norms for NBFCs, which provide credit and financial services outside the traditional banking sector. What Are NBFC Regulations? An NBFC is a company registered under the […]<\/p>\n","protected":false},"author":3,"featured_media":0,"menu_order":0,"template":"","meta":{"_uag_custom_page_level_css":"","footnotes":""},"class_list":["post-14380","glossary","type-glossary","status-publish","hentry"],"blocksy_meta":[],"uagb_featured_image_src":{"full":false,"thumbnail":false,"medium":false,"medium_large":false,"large":false,"1536x1536":false,"2048x2048":false,"web-stories-poster-portrait":false,"web-stories-publisher-logo":false,"web-stories-thumbnail":false},"uagb_author_info":{"display_name":"Team Lemonn","author_link":"https:\/\/lemonn.co.in\/blog\/author\/ashu\/"},"uagb_comment_info":0,"uagb_excerpt":"NBFC (Non-Banking Financial Company) regulations in India are issued by the Reserve Bank of India under the RBI Act, 1934. They govern the registration, operations, capital requirements, and prudential norms for NBFCs, which provide credit and financial services outside the traditional banking sector. What Are NBFC Regulations? An NBFC is a company registered under the…","_links":{"self":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/14380","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary"}],"about":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/types\/glossary"}],"author":[{"embeddable":true,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/users\/3"}],"version-history":[{"count":0,"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/glossary\/14380\/revisions"}],"wp:attachment":[{"href":"https:\/\/lemonn.co.in\/blog\/wp-json\/wp\/v2\/media?parent=14380"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}