ARTICLE · 28 MAY 2024

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Demystifying Net Owned Fund (NOF) Requirement For NBFCs In India

AK & Partners

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Every Non-Banking Finance Company ("NBFC") is required to have a Net Owned Fund ("NOF") as prescribed by the Reserve Bank of India ("RBI") from time to time to commence the business of a Non-Banking...

IndiaFinance and Banking

Every Non-Banking Finance Company ("NBFC") is required to have a Net Owned Fund ("NOF") as prescribed by the Reserve Bank of India ("RBI") from time to time to commence the business of a Non-Banking Financial Institution. Prior to 2021, the minimum NOF requirement was INR 2 crore. However, in October 2021, RBI, vide its notification, now Master Direction – Reserve Bank of India (Non-Banking Financial Company– Scale Based Regulation) Directions, 2023 updated as on November 10, 2023, introduced 'scale-based regulation' for the NBFC sector as part of efforts to establish a robust and resilient financial system¹. The Scale-Based Regulation ("SBR") tailors the regulation and supervision of NBFCs according to their size, activities, and perceived level of risk.

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