Takeover of NBFC

In today’s dynamic financial landscape, expanding your business through acquisition rather than starting from scratch is gaining popularity. One such growth strategy is the takeover of an NBFC (Non-Banking Financial Company). Whether you're an investor, an entrepreneur, or a finance professional, understanding how NBFC acquisition works can open up significant opportunities for you and your business.

In this guide, we’ll walk you through the entire process of NBFC takeover, why businesses consider this route, how to identify an NBFC for takeover, and what regulatory and financial steps are involved. If you're looking to buy an NBFC or just exploring strategic growth options, this article is for you.

What Is an NBFC Takeover?

An NBFC takeover refers to the acquisition of controlling interest in a registered NBFC. This means either a change in management or ownership—effectively allowing the acquirer to run the operations and use the NBFC’s existing regulatory structure to provide financial services.

This can be a valuable route for those looking to enter the financial services market quickly, without going through the lengthy NBFC registration process with the Reserve Bank of India (RBI).

Why Consider an NBFC Takeover?

Here’s why many entrepreneurs and businesses are choosing NBFC acquisition over fresh registration:

  • Time-Saving: Acquiring an existing NBFC allows you to bypass the long and often uncertain RBI registration process.

  • Pre-Approved Compliance: A registered NBFC already meets the regulatory criteria, which gives you a head start.

  • Immediate Market Access: You gain access to existing clients, brand value, and licenses.

  • Strategic Expansion: If you're planning to enter new segments like microfinance, asset finance, or leasing, an NBFC takeover can be a fast-track option.

Types of NBFC Takeovers

NBFC takeovers can be broadly categorized into two types:

  1. Friendly Takeover: This is a mutual agreement between the buyer and seller. The deal is structured smoothly, often including shared interests or long-term strategies.

  2. Hostile Takeover: In this case, the acquiring company gains control of the NBFC against the wishes of the current management. These are rare in the Indian financial space but not unheard of.

Steps Involved in the NBFC Acquisition Process

Taking over an NBFC involves several procedural and regulatory steps. Let’s break them down:

1. Identify a Suitable NBFC for Takeover

Begin by finding an NBFC for takeover that matches your business goals. Look at the company’s financial health, compliance record, licenses held, and market reputation.

2. Sign a Memorandum of Understanding (MoU)

Once you’ve identified the right NBFC, both parties sign an MoU outlining the deal structure. This may include consideration price, liabilities, and terms of the handover.

3. Due Diligence

Conduct a thorough check on the NBFC’s financials, legal status, compliance with RBI norms, existing liabilities, pending litigations, and employee-related obligations.

4. Share Transfer Agreement

Post due diligence, a share transfer agreement is signed to transfer the controlling interest to the acquiring entity.

5. Board Approval

Both companies must hold board meetings and approve the takeover. Resolutions are passed and documented.

6. Intimation to RBI

As per RBI guidelines, any change in shareholding beyond 26% or a change in management requires prior approval. You must apply to RBI with necessary documents like:

  • Details of the proposed buyers

  • Net worth certificates

  • CIBIL reports

  • Business plans

7. Public Notice

Before finalizing the takeover, a public notice must be published in newspapers (one English and one vernacular language) at least 30 days before the transaction.

8. RBI Approval and Compliance

Once RBI approves, the share transfer and management change can take place. You need to update statutory records, ROC filings, and ensure compliance post-acquisition.

Documents Required for NBFC Acquisition

Here’s a checklist of common documents needed:

  • KYC documents of acquirer

  • Business plan for the acquired NBFC

  • MoU and Share Purchase Agreement

  • Net worth certificate

  • Income tax returns of the buyer for the past three years

  • Board and shareholder resolutions

  • CIBIL report

  • Audited financials of the NBFC

Things to Keep in Mind Before You Buy NBFC

  • Regulatory Compliance: Ensure the NBFC has filed all returns and reports with RBI on time.

  • No Legal Disputes: Check for any pending litigation or fraud history.

  • Liability Review: Examine all outstanding loans, employee dues, and pending obligations.

  • Business Compatibility: Choose an NBFC whose focus aligns with your future business goals.

Cost and Timeline

The cost of an NBFC takeover depends on its asset base, licenses, goodwill, and current market standing. Typically, the timeline ranges between 3 to 6 months, depending on RBI’s processing and documentation accuracy.

Benefits of NBFC Acquisition

  • Faster entry into regulated financial markets

  • Established goodwill and clientele

  • Saves legal and administrative time

  • Opportunities for cross-selling and product diversification

  • Easier access to future funding due to regulatory history

Challenges and Risks

  • Hidden liabilities not uncovered during due diligence

  • Complex regulatory compliance

  • Delay in RBI approvals

  • Transition issues with staff and customers

A well-managed NBFC acquisition strategy minimizes these risks and positions your business for sustained financial growth.

Conclusion

A well-planned NBFC takeover can be your gateway to entering India’s financial services market quickly and efficiently. Whether you're a fintech company aiming to offer credit products or a global investor looking for Indian exposure, buying an NBFC offers strategic advantages. The key is careful planning, thorough due diligence, and proper compliance with RBI norms.


As financial regulations tighten and competition grows, NBFC acquisition is proving to be a powerful tool in building scalable and compliant financial operations. If done right, it offers not just an entry but a strong foundation for future growth.

Also read:
NBFC Registration Process

Frequently Asked Questions

1. Can a foreign company buy an NBFC in India?
Yes, a foreign company can acquire an NBFC in India, subject to RBI approval and compliance with FDI norms. Prior approval is needed, especially in regulated sectors.

2. How long does the NBFC takeover process take?
It typically takes 3 to 6 months, depending on how quickly documents are submitted and how soon RBI grants approval.

3. Is RBI approval mandatory for every NBFC acquisition?
RBI approval is required if there's a change in management or if more than 26% of shares are being transferred to a new party.

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