Starting a Non-Banking Financial Company (NBFC) in India can be a profitable business idea. NBFCs play a very important role in providing loans, credit, and financial services to people and businesses, especially where banks have limited reach.
However, before starting an NBFC, you must meet certain legal and financial conditions set by the Reserve Bank of India (RBI). One of the most important conditions is the Minimum Net Owned Fund (NOF) requirement.
In this blog, Corpbiz explains in simple words what Net Owned Fund is, why it is important, how much is required for NBFC registration, and how you can Apply NBFC License Online without any confusion.
What is Net Owned Fund (NOF)?
Net Owned Fund (NOF) means the actual financial strength of an NBFC. It shows how much money the company truly owns after removing liabilities and non-useful assets.
In simple words, NOF is the company’s own money, which can be used to run operations and handle risks.
Net Owned Fund Includes:
Paid-up equity capital
Free reserves
Balance of share premium account
Net Owned Fund Excludes:
Accumulated losses
Deferred revenue expenditure
Intangible assets (like goodwill)
Investments in shares of other NBFCs (in some cases)
Why is Minimum Net Owned Fund Important for NBFC?
The RBI introduced the minimum NOF requirement to ensure that:
Only financially strong companies enter the NBFC sector
NBFCs can manage risks and losses
Customers’ money remains safe and secure
The financial system stays stable and trustworthy
Without sufficient NOF, an NBFC may not be able to survive market ups and downs.
Minimum Net Owned Fund Requirement for NBFC Registration
As per RBI guidelines:
Minimum NOF Required: ₹10 Crore
Earlier, the minimum NOF was ₹2 crore. However, RBI increased it to ₹10 crore to strengthen the NBFC sector.
Important Timeline:
Existing NBFCs were given time to gradually increase their NOF
New NBFC applicants must have ₹10 crore upfront at the time of application
If the NOF requirement is not met, the RBI will reject the NBFC license application.
Types of NBFCs and NOF Requirement
Different types of NBFCs may have different regulatory conditions, but the base NOF requirement remains ₹10 crore for most cases.
1. NBFC – Non-Deposit Taking (NBFC-ND)
Minimum NOF: ₹10 crore
Cannot accept public deposits
2. NBFC – Deposit Taking (NBFC-D)
Higher compliance requirements
Requires RBI approval to accept deposits
3. NBFC Account Aggregator License
An NBFC Account Aggregator License allows companies to collect and share financial data securely with user consent.
Minimum NOF: ₹2 crore (as per current RBI framework)
Highly regulated digital financial model
NOF Requirement for Other Financial Licenses
Many entrepreneurs confuse NBFC registration with other financial licenses. Let’s clarify them:
Apply PPI License
A Prepaid Payment Instrument (PPI) License is issued to wallets and prepaid card providers.
Issued by RBI
Different capital and net worth norms
Not the same as NBFC registration
P2P Lending License
A P2P Lending license allows platforms to connect lenders and borrowers digitally.
Issued as NBFC-P2P
Minimum NOF requirement: ₹2 crore
Strict technology and compliance rules
How to Calculate Net Owned Fund?
Here is a simple formula:
Net Owned Fund = (Paid-up Equity Capital + Free Reserves) – (Accumulated Losses + Intangible Assets)
The RBI checks this calculation carefully using:
Audited balance sheet
CA certificate
Bank statements
Documents Required to Prove Net Owned Fund
When you Apply NBFC License Online, you must submit:
Audited financial statements
Net Owned Fund certificate from Chartered Accountant
Bank balance confirmation
Shareholding pattern
Source of funds declaration
Any mismatch can delay or reject your application.
Common Mistakes to Avoid
Many NBFC applications get rejected due to simple mistakes such as:
Showing borrowed money as NOF
Incorrect calculation of reserves
Including intangible assets
Poor documentation
Non-compliance with RBI format
Expert guidance can help you avoid these issues.
How Corpbiz Helps in NBFC Registration
Corpbiz is a trusted legal and compliance consultancy helping businesses across India.
With Corpbiz, you get:
End-to-end support to Apply NBFC License Online
Expert calculation of Net Owned Fund
CA certification and documentation
RBI application filing and follow-up
Assistance with Apply PPI License, P2P Lending license, and NBFC Account Aggregator License
Our experts ensure that your application meets all RBI norms without delays.
Frequently Asked Questions (FAQs)
1. What is the minimum Net Owned Fund for NBFC registration?
The minimum Net Owned Fund required is ₹10 crore as per RBI guidelines.
2. Can I apply for NBFC registration without ₹10 crore?
No. Without meeting the minimum NOF requirement, the RBI will not approve the application.
3. Is NOF different from paid-up capital?
Yes. Paid-up capital is part of NOF, but NOF also includes reserves and excludes losses and intangible assets.
4. Is the NOF requirement same for P2P Lending license?
No. For P2P Lending license, the minimum NOF required is ₹2 crore.
5. What is the NOF requirement for NBFC Account Aggregator License?
The minimum NOF for NBFC Account Aggregator License is ₹2 crore.
6. Can Corpbiz help me apply for an NBFC license?
Yes. Corpbiz provides complete assistance to Apply NBFC License Online and for other RBI-regulated licenses.
Conclusion
The Minimum Net Owned Fund requirement is the backbone of NBFC registration in India. It ensures that only serious and financially capable companies enter the financial services sector.
Before applying, make sure your funds are genuine, properly documented, and compliant with RBI rules. Taking professional help can save time, money, and avoid rejection.
If you are planning to start an NBFC or need help with Apply PPI License, P2P Lending license, or NBFC Account Aggregator License, Corpbiz is here to support you at every step.
Author Profile
Atul Shukla
Atul Shukla is a legal and compliance expert with extensive experience in RBI regulations, NBFC registration, and financial licensing in India. He regularly writes informative content to help entrepreneurs understand complex laws in simple words and make informed business decisions.
Source: https://facehun.com/blogs/154185/Minimum-Net-Owned-Fund-Requirement-for-NBFC-Registration
