Obtain a Financial License in India

There are various types of financial companies that can be set up in India. Each of them is subject to different requirements when it comes to authorization, which is why if you want to register such a business, you need to file for a banking or financial license in India.

If you want to open such a business, our specialists in company formation in India can help you incorporate it and obtain the necessary financial licenses.

How to register a financial company in India

If you want to register a company in India in the financial sector, you must first choose an appropriate legal entity. From this point of view, please note that such businesses can operate as small or large enterprises. As such, you can select between:

• a one-person company, which operates just like a corporate entity;
• a limited liability partnership, which is a partnership with a minimum number of 2 participants who own shares with limited liability;
• the private limited liability company, which is one of the best business forms for a medium-sized financial enterprise in India;
• the joint stock company, which is often used when creating a banking institution.

The one-person company is often employed to set up a fintech business. No matter the sector of this industry you decide to operate in, you need to obtain a specific financial license in India.

Types of financial companies and licenses in India

The business permit obtained to carry out a financial activity will also reflect the activities completed by the company. For instance:

• the banking license is available for banks and other similar institutions;
• the small finance bank license which is available for financial companies meant to service small companies and households in urban and rural areas;
• there is no single fintech licence: fintechs need the RBI authorisation matching their activity (e.g. payment aggregator, prepaid payment instrument issuer, NBFC, NBFC-P2P or account aggregator).

Local and foreign investors can also set up non-bank financial companies known as Non-Banking Financial Companies (NBFC).

Other types of financial companies found in India are:

• micro-finance companies, either as NBFC-MFIs registered with the RBI under section 45-IA of the RBI Act, 1934 or as Section 8 companies under the Companies Act, 2013;
• credit cooperatives registered under the state or multi-state cooperative societies laws;
• Nidhi companies, which can only accept deposits from and grant loans to their members;
• local finance companies;
• producer companies.

No matter the type of Indian financial license required for any of these enterprises, the issuing authority depends on the activity: the RBI licenses banks, NBFCs and payment entities, while Nidhi companies fall under the Ministry of Corporate Affairs, cooperatives under the Registrars of Cooperative Societies, securities businesses under SEBI, insurers under IRDAI and GIFT City entities under IFSCA.

If you are a foreign investor and want to set up a company in India in this sector, we advise using our business incorporation solutions to avoid misunderstandings.

Our team is also made up of accountants in India who can help you with the complex financial and accounting regulations applicable to this industry. They can help you with filing annual financial statements, as well as with payroll in India.

Requirements to obtain a financial license in India

Depending on the type of activity to be carried out, there are several conditions to meet during the licensing phase with respect to the following:

• number of shareholders (a Nidhi company needs at least 7 members, for example);
• management requirements (for the same Nidhi company, at least 3 directors must be appointed);
• share capital.

When it comes to the share capital requirements for opening a financial company in India, here they are:

• for new NBFCs a net owned fund of at least INR 10 crore (approx. USD 1.1 million) is required (lower for some categories, e.g. INR 2 crore for NBFC-P2P and account aggregators);
• for micro-finance NBCF companies, the minimum net owned fund is INR 10 crore (approx. USD 1.1 million), with existing NBFC-MFIs on a glide path to March 2027;
• INR 10 lakh (approx. USD 11,500) is the minimum paid-up capital for a Nidhi company, however, it needs net owned funds of INR 20 lakh and at least 200 members to apply for Nidhi declaration (Form NDH-4) within 120 days of incorporation.

If you want to open a financial company in India and need assistance, do not hesitate to contact our local specialists. They will help you prepare the necessary documents and obtain the desired Indian financial license.