What is Net Owned Fund (NOF) for NBFC, Nidhi and Microfinance?

Net Owned Fund, or NOF, is the owned capital a finance company must hold as a minimum safety cushion. Broadly, it is paid-up capital plus free reserves, reduced by items such as accumulated losses and certain intangible assets. Regulators set a minimum NOF for each type of lender.

Why it matters

You cannot get or keep a licence without meeting the minimum. For an NBFC, RBI looks at NOF before granting registration. For a Nidhi, the Rules link NOF to how much you can accept as deposits. Planning the capital early avoids rejected applications. See our pages on NBFC registration, Nidhi registration and microfinance company registration.

Minimums to know

• NBFC-ICC, NBFC-MFI and NBFC-Factor: RBI’s March 2022 notification set Rs 10 crore for new registrations from 1 October 2022. Existing NBFCs in these categories were given a phased path, stepping up in stages to Rs 10 crore by 31 March 2027.
• Nidhi companies: Net Owned Funds of Rs 10 lakh or more under the Nidhi Rules, 2014, with a limit of 1:20 between NOF and deposits, and unencumbered term deposits of at least 10 percent of deposits.

Other NBFC types, such as core investment companies, have their own norms, so check the current RBI directions for your category.

Staying compliant

NOF is not a one-time test. It is checked from audited accounts, and falling below the limit can invite regulatory action. Keep an eye on it through NBFC compliance and Nidhi company compliance. Read our guide on RBI approvals for NBFC and fintech too.

Common mistakes

• Counting loans from directors or revaluation gains as NOF.
• Forgetting to deduct accumulated losses.
• Using old limits that RBI has since revised.
• Letting deposits grow without matching NOF in a Nidhi.

Related guides: RBI approvals for NBFC and fintech, MCA and ROC, Multi-State Co-operative Societies Act

FAQs

What is the NOF for an NBFC?

For NBFC-ICC, NBFC-MFI and NBFC-Factor, RBI set Rs 10 crore for new registrations from 1 October 2022, with a phased path for existing firms to reach it by 31 March 2027.

What is the NOF requirement for a Nidhi company?

The Nidhi Rules, 2014 require Net Owned Funds of Rs 10 lakh or more, and deposits can be at most 20 times NOF.

Does NOF include borrowed money?

No. NOF is built from owned funds such as paid-up capital and free reserves, not borrowings.

Not sure which way to go? Talk to a Taxhint expert and we will look at your case before you file anything.