NBFC Takeover — Change in Control with RBI Approval
An NBFC takeover needs the Reserve Bank of India’s prior written permission before control changes hands or a buyer’s stake reaches 26% of the paid-up equity. We run the due diligence, file the application on RBI’s PRAVAAH portal, publish the 30-day public notice and close the deal.
What it is
An NBFC takeover is the purchase of control of a company that already holds a Certificate of Registration (CoR) from the RBI. The buyer acquires shares, and often board seats, instead of applying for a fresh NBFC registration. The CoR stays with the company, so what changes is who owns and runs it.
Picture a Faridabad auto-parts maker that wants to finance its own dealers. Buying a small registered NBFC-ICC is one route. Applying for a new CoR is the other. Either way, the NOF target is ₹10 crore.
Because RBI wants to know who controls every lender it regulates, the deal cannot close on a handshake. The rules sit in the Reserve Bank of India (Non-Banking Financial Companies – Acquisition of Shareholding or Control) Directions, 2025, issued on 28 November 2025, and in the NBFC Governance Directions, 2025 for board changes. They cover most NBFC types, including ICCs, MFIs, factors, HFCs, CICs and P2P platforms; NOFHCs and mortgage guarantee companies are outside. The share transfer itself follows the Companies Act, 2013.
Who it applies to
Buying control or a 26% stake
Investors and business groups acquiring control of a registered NBFC, or building a stake that will reach 26% of its paid-up equity, in one go or in instalments.
Selling your holding
Promoters selling all or part of their holding. The NBFC files the application and gives the public notice with the buyer, so the seller’s side carries much of the paperwork.
Replacing more than 30% of the board
An NBFC whose management change would replace more than 30% of its directors, not counting independent directors, needs RBI’s prior permission even if no shares move. If a new investor wants three of five non-independent directors replaced, that is 60%.
What needs RBI approval
| Event | Prior RBI permission? | Source |
|---|---|---|
| Takeover or acquisition of control, whether or not management changes | Yes | Acquisition Directions, para 6(1) |
| Change in shareholding, including progressive increases over time, reaching 26% or more of paid-up equity | Yes | Acquisition Directions, para 6(2) |
| Change in management replacing more than 30% of directors (independent directors excluded) | Yes | Governance Directions, para 10 |
| Directors re-elected on retirement by rotation | No | Governance Directions, para 10 |
| Stake crossing 26% only because of a buyback or capital reduction approved by a competent court | No, but report to RBI within one month | Acquisition Directions, para 6 proviso |
Note the words “progressive increases over time”. Say a Palwal investor takes 15% of a family NBFC this year and another 12% next year. The second purchase takes the holding to 27%, so it needs approval. Any change in directors must also be reported to RBI, even where no prior permission is needed.
Why it matters
You inherit the licence and its history
The CoR comes with the company, and so do its loan book, its tax position, its RBI filings and any defaults. A takeover is only as clean as the NBFC you buy.
RBI vets the new owners
RBI asks for the source of funds, a bankers’ report and declarations on criminal cases and past associations. A weak file slows approval.
Give the public 30 days’ notice
Borrowers and lenders learn of the change through newspaper notices at least 30 days before it takes effect, so the timeline has to allow for them.
Due diligence checklist
| Area | What we check |
|---|---|
| Registration | CoR, category and layer; principal business test (financial assets and income each above 50%) |
| Capital | Net Owned Fund against the requirement. An NBFC-ICC needs ₹10 crore by 31 March 2027 or it cannot hold the CoR |
| RBI filings | DNBS returns, Statutory Auditor Certificates on CIMS, RBI correspondence and any inspection findings |
| Loan book | Asset classification, provisioning, overdue accounts, top borrowers and loan documentation |
| Conduct | KYC records, Fair Practices Code, credit bureau membership and reporting, customer complaints |
| Company law | AOC-4, MGT-7, DIR-12 history, statutory registers, share certificates, charges |
| Tax and litigation | Income tax and GST assessments, TDS defaults, pending cases and notices |
In practice, the surprises sit in the loan book and the RBI returns. If the NBFC’s ledger lives in old spreadsheets, we reconcile it against the borrower records before you sign anything. Closing is also the natural moment to move the book onto proper loan management software.
Documents required
Collect from the NBFC
- CoR, MoA and AoA, and shareholding pattern
- Audited financial statements and recent SACs
- Board resolution approving the application
Collect from the buyer
- Information on proposed shareholders (Annex I)
- Proof of the source of funds
- Declarations: no link with unincorporated bodies taking deposits, no link with companies whose CoR application was rejected, no criminal cases including under Section 138 of the NI Act
- Bankers’ report on the proposed shareholders
Prepare for the new board and closing
- Fit-and-proper declarations of proposed directors (Annex II)
- DIR-2 and DIR-8 for each new director
- Stamped SH-4 transfer deeds or depository instructions
- Newspaper copies of the public notice
How it works
Run the due diligence
We work through the checklist above and give you a written list of gaps and how to fix each.
Sign an agreement conditional on approval
The share purchase agreement makes closing conditional on RBI’s permission, so no shares or board seats move before approval.
Apply to RBI on PRAVAAH
The NBFC files the application on its letterhead through PRAVAAH, with the buyer’s documents listed above.
Publish the public notice
After RBI’s permission, the NBFC and the buyer each publish a notice, or one joint notice, in a leading national newspaper and one leading local vernacular newspaper covering the registered office.
Close the deal and update the records
Once the 30 days pass, shares are transferred, the board is reconstituted and DIR-12 is filed on the MCA V3 portal. RBI is informed of the director changes, and the next annual ROC filings reflect the new shareholding.
Timelines
Leave open time for RBI’s decision
The Directions do not set a time limit for RBI to decide. A complete file avoids back-and-forth.
Publish the notice 30 days before closing
The notice must appear at least 30 days before the transfer of ownership or control takes effect. Here is the catch: it can go out only after RBI’s permission, not when you apply.
File DIR-12 and SH-4 after closing
DIR-12 for new or outgoing directors is due within 30 days. A physical SH-4 must reach the company within 60 days of execution. For a non-resident buyer, FC-TRS is due within 60 days of the transfer or the payment, whichever is earlier.
What happens if you close without approval
You breach RBI’s Directions
Prior permission means before the shares or control move. A transfer completed first and reported later is a breach of the Acquisition Directions, which RBI enforces under the RBI Act, 1934.
Risk unwinding the deal
If RBI refuses permission after the shares have moved, the parties may have to reverse the transfer. Undoing a transfer costs far more than waiting.
You buy someone else’s defaults
Without due diligence, a pending NOF shortfall, missing returns or KYC gaps become the new owner’s problem, and the CoR is at stake if NOF is short on 31 March 2027.
Frequently asked questions
When does an NBFC takeover need RBI approval?
Prior written permission from RBI is needed for any takeover or acquisition of control, and for any change in shareholding that takes a person to 26% or more of the paid-up equity, including step-by-step increases. A change in management that replaces more than 30% of the directors, leaving out independent directors, also needs permission. Plan the approval into the deal timeline from the start and it will not hold you up.
Does buying less than 26% of an NBFC need RBI approval?
Not under the 26% rule alone, but control is a separate test. Control takes its meaning from the SEBI Takeover Regulations, 2011 and includes the right to appoint a majority of directors or to control management or policy decisions. A smaller stake with such rights still needs prior permission. Later purchases also count: once your total reaches 26%, that purchase needs approval. We map your full stake and rights before you sign.
Who files the application, the buyer or the NBFC?
The NBFC files it, on its own letterhead, through RBI’s PRAVAAH portal. The buyer supplies most of the content: information on the proposed shareholders in Annex I, the source of funds, three declarations and a bankers’ report. We prepare the file from both ends so it goes in complete the first time.
When and where is the public notice published?
After RBI grants permission, and at least 30 days before the transfer takes effect. It appears in at least one leading national newspaper and one leading local vernacular newspaper covering the place of the registered office. The NBFC and the buyer each give it, or give it jointly. It states the intention to transfer, the buyer’s particulars and the reasons. We draft it and track the 30 days.
How long does RBI take to approve an NBFC takeover?
RBI’s Directions do not fix a period for deciding. The time depends on how complete the application is and how fast queries are answered. After approval, the public notice adds at least 30 days before closing. Keep the share purchase agreement’s long-stop date generous. A clean due diligence file and ready declarations are the best way to keep it moving.
What declarations must the new shareholders give?
Three, along with the Annex I information and a bankers’ report. They must declare that they are not associated with any unincorporated body accepting deposits, not associated with any company whose application for a CoR was rejected, and that no criminal case, including one under Section 138 of the Negotiable Instruments Act, is pending against them. Proposed directors also give fit-and-proper declarations in Annex II. We collect and check them before filing.
Is approval needed if our stake crosses 26% because of a buyback?
No prior approval is needed if the stake goes beyond 26% only because of a buyback of shares or a reduction of capital approved by a competent court. The NBFC must still report it to RBI within one month of it happening. A buyback without that approval does not get the exemption. We check which route your capital change takes.
Does the NBFC need a new CoR after the takeover?
No, because the CoR belongs to the company and the company does not change. What changes is who owns and runs it. The NBFC must still meet every condition of the CoR, including the Net Owned Fund requirement, which rises to ₹10 crore for NBFC-ICCs by 31 March 2027. Check the NOF before you price the deal and there are no surprises later.
What it costs
Our fee plus the government fee that applies to your case, quoted before you commit. Tell us the situation and we will price it exactly.
Government costs on the closing side include stamp duty of 0.015% on the share consideration and the DIR-12 fee of ₹200 to ₹600 per form, depending on authorised capital.
Ready to begin?
Tell us which NBFC you are buying or selling and the stake involved, and we will map the RBI approval and closing steps.