How NBFCs Are Regulated in India
In India, NBFCs (Non-Banking Financial Companies) have become vital financial institutions. From offering loans to managing investments, their role is increasing every year. But what ensures that NBFCs are safe, reliable, and operate within legal limits? The answer lies in how they are regulated.
Who Regulates NBFCs in India?
NBFCs are regulated by the Reserve Bank of India (RBI). However, their regulation has two parts:
Incorporation: Every NBFC must be registered as a company under the Companies Act, 2013. This gives them a legal identity like any other business in India.
Financial Regulation: After company registration, an NBFC must obtain a Certificate of Registration (CoR) from the Reserve Bank of India to operate legally as an NBFC. The RBI governs them under the Reserve Bank of India Act, 1934, especially Section 45-IA.
What Rules Must NBFCs Follow?
Once registered, NBFCs must follow specific RBI guidelines, including:
- Minimum Net Owned Fund (NOF): Rs 10 crore for most NBFCs
- Fair lending practices and customer protection norms
- Capital Adequacy Ratios (CAR)
- Asset classification and provisioning norms
- Submission of returns and regular compliance checks
These rules help RBI monitor their risk exposure and financial health.
What Happens If an NBFC Violates Rules?
If an NBFC fails to comply with RBI guidelines, the RBI has the power to:
- Cancel or suspend its registration
- Impose penalties
- Restrict or ban business operations
- File legal actions for recovery or fraud
This ensures public trust and financial discipline.
Types of NBFCs and Their Regulation
Different NBFCs serve different financial needs. Some popular categories are:
- NBFC-ICC (Investment and Credit Company)
- NBFC-MFI (Micro Finance Institution)
- NBFC-Factor (Bill discounting)
- NBFC-Infrastructure Finance Companies
Each type must follow additional category-specific rules issued by RBI.
You can read about each type in more detail in our blog on Types of RBI Registered NBFCs.
Where Can You Find the Official List?
RBI regularly updates and publishes the list of registered NBFCs on its official website. For your convenience, we have also curated the full RBI Approved NBFC List in India 2025, featuring verified and currently active NBFCs.
You can also explore this list of NBFCs in India to check names, cities, and registration details.
Why Does Regulation Matter?
Strong regulation:
- Protects customers from fraud
- Maintains financial system stability
- Ensures fair lending and recovery practices
- Builds public trust in NBFCs
Without RBI oversight, NBFCs would be free to misuse funds or take on risky practices — which would hurt borrowers and investors alike.
NBFCs are helping bridge India’s credit gap, especially in rural and underserved areas. But their success depends on strong regulation, and RBI ensures that with a proper framework.
If you are planning to take a loan or invest with any NBFC, make sure to refer to the trusted NBFC bank list in India to avoid frauds and make smart decisions.
Disclaimer: This post is for general informational purposes only. It does not constitute financial advice. Please consult a qualified professional before making financial decisions.
