Microfinance Registration with RBI – Complete Guide (2026)
Microfinance registration with RBI is mandatory if you want to legally operate a microfinance institution at scale in India. The Reserve Bank of India regulates microfinance companies under the NBFC framework to ensure financial stability, borrower protection, and compliance.
If you are planning to register a microfinance company, this guide explains the RBI registration process, capital requirements, documentation, eligibility criteria, and compliance obligations.
What is Microfinance Registration with RBI?
Microfinance companies operating as NBFC-MFIs must obtain a Certificate of Registration (CoR) from the Reserve Bank of India under the RBI Act, 1934.
Without RBI registration:
- You cannot conduct large-scale lending.
- You cannot raise institutional funding.
- You may face legal penalties.
RBI regulates microfinance institutions to maintain transparency, fair lending practices, and financial discipline.
Eligibility for Microfinance Registration with RBI
To apply for microfinance registration with RBI, the company must:
- Be incorporated as a Private Limited Company under Companies Act, 2013.
- Have minimum Net Owned Fund (NOF) of ₹10 Crore.
- Have clean financial background of promoters.
- Meet “Fit and Proper” criteria of RBI.
For North Eastern States, minimum NOF requirement is ₹5 Crore.
Capital Requirement for RBI Microfinance Registration
The minimum capital requirement includes:
- ₹10 Crore Net Owned Fund (for most states)
- Fully paid-up equity capital
- Properly documented source of funds
RBI verifies:
- Bank statements
- Income tax returns
- Net worth certificates
- Auditor certification
Unexplained funds can result in rejection.
Step-by-Step Process for Microfinance Registration RBI
Step 1 – Company Incorporation
Incorporate a Private Limited Company with financial services as main object clause.
Ensure:
- Proper board structure
- At least one director with financial background
- Clean credit history
Step 2 – Capital Infusion
Deposit required capital in company bank account and obtain:
- CA Certificate for Net Owned Fund
- Banker’s certificate
Step 3 – Documentation Preparation
Key documents required:
- Detailed business plan (5-year projection)
- KYC of directors
- Board resolution
- CIBIL reports
- Financial statements
- Organizational structure
Strong documentation improves approval chances.
Step 4 – Online Application to RBI
Submit application through RBI COSMOS portal.
After submission:
- Physical documents are sent to RBI regional office.
- RBI conducts background checks.
- Promoters may be called for clarification.
Step 5 – RBI Scrutiny & Approval
RBI evaluates:
- Business viability
- Governance standards
- Compliance readiness
- Financial stability
If satisfied, RBI issues Certificate of Registration (CoR).
Timeline for Microfinance Registration with RBI
Typically takes:
6 to 12 months depending on:
- Quality of documentation
- Promoter background
- RBI workload
Incomplete documentation delays approval.
RBI Compliance After Registration
Once registered, NBFC-MFI must follow:
- RBI Master Directions on Microfinance
- Fair Practices Code
- KYC & AML norms
- Periodic reporting requirements
Non-compliance can lead to cancellation of licence.
Common Reasons for RBI Rejection
- Weak promoter profile
- Poor CIBIL score
- Insufficient capital trail
- Incomplete documentation
- Unrealistic projections
Professional advisory significantly reduces rejection risk.
Benefits of RBI Microfinance Registration
- Legal authority to lend
- Access to bank funding
- Investor credibility
- PAN-India operational ability
- Regulatory recognition
For entrepreneurs planning long-term microfinance business, RBI registration is essential.
FAQs – Microfinance Registration RBI
- Is RBI registration mandatory for microfinance?
Yes, for NBFC-MFI operations at scale.
- What is minimum capital required?
₹10 Crore Net Owned Fund (₹5 Crore for NE states).
- How long does RBI approval take?
Generally 6–12 months.
- Can foreign investors invest?
Yes, subject to FEMA and FDI guidelines.
