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NBFC Takeover Procedure in India – Complete Regulatory Guide

  • 08-Feb-2026
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NBFC Takeover Procedure in India – Complete Regulatory Guide

A takeover of a Non-Banking Financial Company (NBFC) is a strategic move for investors and businesses seeking a faster entry into the financial services sector. However, due to strict oversight by the Reserve Bank of India (RBI), an NBFC takeover must follow a clearly defined and compliant procedure.

This blog explains the NBFC takeover procedure in India, highlighting regulatory requirements, documentation, and key steps involved in a successful takeover.

What Is an NBFC Takeover?

An NBFC takeover involves the transfer of ownership, management, or controlling interest in an RBI-registered NBFC. This may occur through:

  • Acquisition of shares

  • Change in promoters or directors

  • Transfer of management control

  • Merger or amalgamation

Any takeover resulting in a change of control requires prior RBI approval.

Regulatory Framework Governing NBFC Takeovers

NBFC takeovers are governed by:

  • RBI Act, 1934

  • RBI Master Directions for NBFCs

  • Companies Act, 2013

RBI approval is mandatory when:

  • Shareholding acquisition exceeds 26%

  • There is any change in management or control

  • NBFC is merged or acquired

Step-by-Step NBFC Takeover Procedure

1️⃣ Board Resolution & In-Principle Approval

Both the acquirer and the target NBFC must pass board resolutions approving the proposed takeover and authorizing representatives to proceed.

2️⃣ Legal & Financial Due Diligence

A detailed due diligence is conducted to assess:

  • Financial statements and asset quality

  • Capital adequacy and RBI compliance history

  • Loan portfolio and NPAs

  • Pending litigations or regulatory issues

3️⃣ Public Notice Requirement

RBI mandates publication of a public notice at least 30 days prior to the takeover:

  • One English national newspaper

  • One vernacular newspaper of the registered office state

The notice must disclose details of incoming and outgoing promoters and the reason for takeover.

4️⃣ Application for RBI Approval

An application is filed with RBI along with:

  • Details of proposed shareholding pattern

  • KYC of incoming promoters and directors

  • Source of funds declaration

  • Business plan post-takeover

5️⃣ RBI Examination & Approval

RBI evaluates:

  • Financial soundness and integrity of acquirer

  • Compliance track record of the NBFC

  • Impact on depositors and customers

Upon satisfaction, RBI grants prior written approval.

6️⃣ Execution of Share Transfer & Control Change

After RBI approval:

  • Share Purchase Agreement is executed

  • Shares are transferred

  • Management control is handed over

  • Consideration is paid

7️⃣ Post-Takeover Compliance

The NBFC must complete:

  • RBI intimation of takeover completion

  • ROC filings (DIR-12, MGT-7, etc.)

  • Update statutory registers

  • Intimation to banks and stakeholders

Documents Required for NBFC Takeover

  • RBI Certificate of Registration

  • Memorandum & Articles of Association

  • Audited financials (last 3 years)

  • KYC documents of incoming promoters

  • Net worth and source of funds proof

  • Board and shareholder resolutions

Timeline for NBFC Takeover

⏳ Estimated duration:
3 to 6 months, depending on RBI review, transaction structure, and document readiness.

Benefits of NBFC Takeover

  • Faster market entry

  • Existing RBI license

  • Operational NBFC framework

  • Established compliance structure

  • Cost-effective compared to fresh registration

Conclusion

The NBFC takeover procedure is a regulatory-intensive process that requires careful planning, strict compliance, and professional execution. Any lapse in RBI norms can delay approval or invalidate the transaction.

With proper due diligence and expert guidance, an NBFC takeover can be a smooth, compliant, and strategically rewarding process.

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