What Does the NBFC Sector Include?

By Yamm Labs · Updated September 2026 · 6 min read

A product team in Gurugram is building a gold loan campaign. Someone asks whether the company is “a kind of bank”. Someone else says it is fintech. The compliance lead says neither: it is an NBFC, registered with the Reserve Bank of India, and that one word decides what the ad can promise, which name sits on the offer screen and what the borrower must see before signing.

What counts as an NBFC in India?

An NBFC is a company registered under the Companies Act that carries on the business of loans and advances, buying shares, bonds or other securities, leasing or hire purchase as its principal business. A company whose main business is agriculture, industrial activity, selling goods or services, or buying and selling property is not an NBFC, even if it lends on the side.

RBI’s test for “principal business” is the 50-50 rule: financial assets must be more than half of total assets, and income from financial assets more than half of gross income. A company that crosses both lines generally needs a certificate of registration from RBI before it carries on the business, though RBI exempts a few narrow categories. RBI publishes the list of registered NBFCs on its website, plus a separate list of NBFCs licensed to accept deposits that the public is advised to check before placing deposits.

Which types of NBFC make up the sector?

RBI’s own FAQ on NBFCs names these categories. Most consumer brands a buyer sees fall into the first two rows.

How does RBI’s layer system divide the NBFC sector?

Since RBI’s scale-based framework of October 2021, NBFCs sit in four layers by size, activity and risk.

• Base Layer. Non-deposit-taking NBFCs below ₹1,000 crore in assets, plus peer-to-peer platforms, account aggregators and non-operative financial holding companies.
• Middle Layer. Every deposit-taking NBFC regardless of size, non-deposit-taking NBFCs of ₹1,000 crore or more, and housing finance, infrastructure finance, infrastructure debt fund, core investment and standalone primary dealer companies.
• Upper Layer. NBFCs RBI names using a scoring method. The ten largest eligible NBFCs by assets always sit here.
• Top Layer. Expected to stay empty. RBI would move an Upper Layer NBFC here only if its systemic risk rose sharply.

For a marketer, the layer is a proxy for how heavy the compliance review will be. A Base Layer lender may have one compliance officer. An Upper Layer lender will have committees, and campaign timelines should allow for them.

What is outside the NBFC sector?

Several financial businesses look like NBFCs but are not regulated as NBFCs by RBI. Insurance companies are regulated by IRDAI. Merchant bankers, stock brokers and alternative investment funds register with SEBI. Chit funds operate under the Chit Funds Act, 1982. Nidhi companies, stock exchanges and mutual benefit companies are also exempt from RBI’s NBFC registration.

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Banks are outside too. RBI’s FAQ lists three differences: an NBFC cannot accept demand deposits, is not part of the payment and settlement system and cannot issue cheques drawn on itself, and its depositors do not get deposit insurance from the DICGC. Only NBFCs holding a deposit-taking certificate and an investment-grade rating may accept public deposits at all.

An NBFC can lend like a bank, but it cannot look like one.

What regulator-driven design decision follows from being an NBFC?

Being an NBFC changes the screens, not only the fine print. Three decisions we make on every NBFC lending journey:

• Name the lender where the offer appears. When a loan is offered inside a partner app, the NBFC’s registered name sits on the offer screen, next to the amount, tenor and APR, as well as in the terms. RBI’s digital lending rules expect borrowers to see who the lender is, and a clear lender lockup keeps the partner’s brand from implying it is the one lending.
• Show the Key Facts Statement before the signature. RBI requires lenders, NBFCs included, to give a Key Facts Statement with the APR before the loan contract is executed, for retail and MSME term loans sanctioned from 1 October 2024. We design the KFS as its own screen before e-sign, not as a PDF link after it.
• Keep bank language out. Indian banking law reserves the word “bank” for banking companies. Headlines, app names and taglines avoid “bank” and anything that suggests insured deposits, cheque books or a savings account the NBFC cannot offer.

What should a buyer decide once they know the sector?

Start with the registration, not the campaign. Confirm the lender’s NBFC type and layer, check the name on RBI’s list, then decide how the lender and any partner brand share each screen. That order sets the lockup, the disclosure sequence and the review time. For the full set of NBFC marketing answers, see our NBFC marketing questions hub, or read how Yamm Labs works with BFSI brands from Gurugram.

A worked example: placing the gold loan lender

Go back to the Gurugram team and its gold loan campaign. The compliance lead’s answer, that the company is an NBFC, settles the argument. It also sets up four checks that shape the campaign before anyone opens a design file.

Type. A gold loan lender makes loans against gold, so in RBI’s categories it would usually sit with the Investment and Credit Companies, the first row of the table above. The team confirms this against the company’s registration rather than assuming it.

Layer. The layer depends on size, activity and risk. If the lender takes no deposits and has less than ₹1,000 crore in assets, it sits in the Base Layer. If it is larger, or takes deposits, it sits in the Middle Layer or above. The layer tells the team how many review steps to plan for.

Name. The team checks the registered name on RBI’s list. That exact name goes on the offer screen and the Key Facts Statement.

Words. The copy avoids “bank” and anything that suggests insured deposits. The campaign can promise a quick loan against gold. It cannot promise to be a bank.

Common mistakes when describing the NBFC sector

Most errors come from drawing the sector too wide or too narrow. These are the ones that cause rework in campaigns and content.

• Calling every lender an NBFC. Banks lend too, and some lending apps are lending service providers, not lenders. Only a company that meets RBI’s principal business test and holds registration, unless exempt, is an NBFC.
• Putting insurers, brokers or chit funds inside the sector. Insurers answer to IRDAI, brokers and merchant bankers to SEBI, and chit funds to the Chit Funds Act, 1982.
• Assuming every NBFC can take deposits. Only NBFCs with a deposit-taking certificate and an investment-grade rating may accept public deposits, and DICGC insurance does not cover them.
• Treating the layer as a ranking. The layer reflects size, activity and risk for supervision. It is not a mark of quality to use in advertising.
• Using one template for every type. A microfinance lender, a housing finance company and an account aggregator meet their customers in very different places, as the table shows.
• Letting bank language slip in. “Bank”, “savings account” and “cheque book” all suggest services an NBFC cannot offer.

Each of these mistakes is cheap to fix before the first layout is drawn, and expensive once a campaign has been designed, reviewed and sent back.

A step-by-step checklist to place a company in the NBFC sector

This order works for a marketer, a content writer or an agency new to the account. It moves from the registration to the screens.

1. Check the principal business. Is financial activity the main business, by the 50-50 test on assets and income?
2. Check the registration. Find the company on RBI’s list of registered NBFCs, or note which exemption applies.
3. Identify the type. Match the company to one of RBI’s categories, such as an Investment and Credit Company, housing finance company or account aggregator.
4. Identify the layer. Base, Middle or Upper, from its size, activity and whether it takes deposits.
5. Check deposits. If the company takes deposits, confirm it appears on RBI’s list of NBFCs licensed to accept them.
6. Map the screens. Where the lender’s name, the APR and the Key Facts Statement appear in each journey.
7. Plan the review. Allow review time that matches the layer and the size of the compliance team.

RBI updates its directions from time to time. Confirm the current text with your compliance team before a campaign or product page goes live.

How to brief an agency on an NBFC brand

An agency that understands where the client sits in the NBFC sector will ask the right questions early. Give it these answers up front:

• The registered name, the NBFC type and the layer.
• Whether the company takes deposits, and which products it offers.
• Whether it lends under its own brand, through partner apps, or both.
• If partner apps are involved, how the lender’s name and the partner’s logo should sit together on each screen.
• The words the brand must avoid, starting with “bank”.
• Who in compliance reviews the work, and how long each review takes.

Ask the agency to show the offer screen, with the lender’s name and APR, in its first round. That one screen reveals whether it has understood what an NBFC is and is not.

People also ask

Is a housing finance company an NBFC?

Yes. RBI lists housing finance companies as a category of NBFC. Under the scale-based framework, housing finance companies sit in the Middle Layer or above, whatever their size.

Are fintech lending apps part of the NBFC sector?

Only if the company itself holds an NBFC registration. Many apps are lending service providers that source loans for a registered NBFC or bank, and the loan sits on that lender’s books. The lender’s name belongs on the offer, and RBI’s digital lending rules put the Key Facts Statement on that lender’s letterhead.

How can I check whether a company is a registered NBFC?

RBI publishes the list of registered NBFCs on its website, under the non-banking section. Before placing a deposit, check RBI’s separate list of NBFCs licensed to accept deposits, as RBI advises.

Is a gold loan company part of the NBFC sector?

Usually, yes. A company whose principal business is lending against gold meets RBI’s test for an NBFC and needs RBI registration. In RBI’s categories it would generally sit with the Investment and Credit Companies. Banks also make gold loans, so the lender’s registration, not the product, decides whether it is part of the NBFC sector.

Are insurance companies part of the NBFC sector?

No. Insurance companies are regulated by IRDAI, not by RBI as NBFCs. The same is true of stock brokers and merchant bankers, which register with SEBI, and of chit funds, which operate under the Chit Funds Act, 1982. They are financial businesses, but they sit outside the NBFC sector.

Is an account aggregator part of the NBFC sector?

Yes. RBI lists the NBFC-Account Aggregator as a category of NBFC. It moves a customer’s financial data with consent rather than lending, and under the scale-based framework it sits in the Base Layer. Customers usually meet it on the consent screen inside a lending or wealth app, not as a brand in its own right.

Which layer of the NBFC sector is the strictest?

The higher the layer, the closer the supervision. The Upper Layer holds NBFCs that RBI names using a scoring method, and the ten largest eligible NBFCs by assets always sit there. The Top Layer is expected to stay empty; RBI would move an Upper Layer NBFC there only if its systemic risk rose sharply.

Is a microfinance lender part of the NBFC sector?

It can be. RBI lists the Micro Finance Institution, or NBFC-MFI, as one of its NBFC categories, making small loans to low-income households, often through group lending and field officers. Banks can also lend to the same households, so a microfinance lender is part of the NBFC sector only if it is registered with RBI as an NBFC.

Can a company operate in the NBFC sector without RBI registration?

Generally, no. A company that passes RBI’s 50-50 principal business test needs a certificate of registration before it carries on the business. RBI exempts a few narrow categories, and some financial businesses, such as nidhi companies and chit funds, sit outside the NBFC sector under other laws. If in doubt, check RBI’s list of registered NBFCs.