How to Register a Loan Company in India: Step-by-Step Guide

Starting a loan company in India is a good business idea, especially with the growing demand for financial services. However, offering loans legally requires proper registration and approval from the Reserve Bank of India (RBI). This guide explains how you can register a loan company in India step by step.

Whether you plan to offer personal loans, business loans, peer-to-peer (P2P) lending, or prepaid payment services, you must follow the rules laid down by the RBI and other financial authorities.

Let's break it down simply.

What is a Loan Company?

A loan company is a type of Non-Banking Financial Company (NBFC) that provides credit facilities like personal loans, gold loans, business loans, and consumer loans. Unlike banks, they do not take demand deposits (like savings accounts), but they lend money and earn through interest.

Step-by-Step Guide to Register a Loan Company in India

Step 1: Decide the Type of Loan Business

There are different types of loan-related business models in India. Here are a few:

• NBFC Loan Company – Regular loan operations

• Account Aggregator – Shares financial data with consent

• P2P Lending Platform – Connects lenders with borrowers online

• Prepaid Payment Instruments (PPI) – Offers digital wallets or cards

Choose the right type based on your business plan.

Step 2: Register a Company

Before applying for any license, you must first register your business as a company:

• Register a Private Limited Company or Public Limited Company under the Companies Act, 2013.

• Have a minimum of 2 directors (one must be Indian resident).

• Have at least ₹2 crore net owned funds (capital) for NBFC registration.

• Create a proper business plan, Memorandum of Association (MOA), and Articles of Association (AOA).

Step 3: Open a Bank Account and Deposit Capital

To prove your financial strength:

• Open a bank account in your company's name.

• Deposit the minimum required capital (₹2 crore or more).

• Get a certificate from the bank confirming this balance.

This step is crucial for NBFC Registration in India.

Step 4: Apply for NBFC License from RBI

If you're starting a loan business, you need to apply for an NBFC license registration through the RBI COSMOS portal.

Documents Required:

• Company incorporation documents (MOA, AOA, PAN, CIN)

• Net worth certificate

• Bank balance proof

• Director's KYC, qualifications, and background

• Business plan and future projections

• Risk management policy

After submitting the application, the RBI will review it, ask for clarifications (if needed), and then issue a Certificate of Registration (CoR).

Types of Loan Company Licenses in India

Here are the key loan-related licenses and their features:

1. NBFC Registration in India

• Needed for companies providing loans and advances.

• Minimum ₹2 crore net owned fund required.

• Must follow RBI guidelines on interest rates, KYC, and compliance.

• Examples: Personal loan NBFCs, Gold loan NBFCs, etc.

2. Account Aggregator License

• Issued by RBI for companies that share financial data securely between banks and financial institutions.

• Does not involve lending directly but plays a major role in the lending process.

• Helps build digital credit history for borrowers.

3. P2P Lending License in India

• For online platforms that connect individual lenders with borrowers.

• Registered as NBFC-P2P under RBI.

• Must maintain escrow accounts for transactions.

• Requires proper digital infrastructure and cyber security protocols.

4. PPI License in India

• For businesses offering Prepaid Payment Instruments like wallets, gift cards, and digital vouchers.

• Issued by RBI under the Payment and Settlement Systems Act, 2007.

• Useful if your loan company wants to discharge or collect loans digitally.

RBI Compliance After Registration

Once you are registered, RBI expects regular updates and strict compliance:

• Monthly and quarterly returns to RBI

• Maintain loan books, credit risk records, and KYC documents

• Conduct regular audits and submit audit reports

• Follow RBI rules on lending rates, NBFC board governance, and fair practices

Advantages of Starting a Loan Company

• Growing demand for credit in India

• Low operating costs due to digital platforms

• Opportunity to serve unbanked or underbanked areas

• Flexible business models: NBFC, P2P, or PPI-based

Challenges You May Face

• High regulatory compliance

• Need for strong tech infrastructure (especially for P2P or digital wallets)

• Risk management in loan recovery

• Requirement for large upfront capital

Tips for Success

• Start small and scale as you build trust

• Use digital tools for verification, KYC, and credit assessment

• Partner with banks or fintech platforms

• Maintain strong customer service and grievance redressal systems

Conclusion

Registering a loan company in India is a smart business move, but it requires careful planning and following legal steps. Whether you choose NBFC Registration in India, apply for an Account Aggregator License, get a P2P Lending License in India, or launch with a PPI License in India , compliance is key.

If you need professional help, it's best to consult with experts who specialize in financial licensing and RBI compliance.

Need Help Registering Your Loan Company?

? Corpbiz can guide you through every step – from company formation to getting NBFC, P2P, PPI, or Account Aggregator licenses. Our experts make the process easy and hassle-free.

Frequently Asked Questions (FAQs)

1. What is the minimum capital required for NBFC registration in India?

To register a loan company as an NBFC, you must have a minimum net owned fund of ₹2 crore. This amount must be kept in a bank account and should be free from any liabilities.

2. Do I need RBI approval to offer loans online in India?

Yes. If you want to offer loans through a company, whether online or offline, you must register as an NBFC and get RBI approval. If you're running a P2P lending platform, you need an NBFC-P2P license from the RBI.

3. Can a startup register for an Account Aggregator license?

Yes, startups that meet the RBI's eligibility criteria and have strong data security systems can apply for an Account Aggregator license. The company must be incorporated and follow strict data handling guidelines.

4. Is a PPI license required for disbursing loans via digital wallets?

If your loan company plans to use digital wallets or prepaid instruments to discharge or collect loans, you must apply for a PPI (Prepaid Payment Instrument) license from the RBI.

5. How long does it take to register a loan company in India?

The process of registering a loan company and obtaining an NBFC license from RBI may take 3 to 6 months, depending on document readiness and RBI review time. Expert assistance can speed up the process.

About the Author

Atul Shukla
Fintech Expert | Legal Consultant | Associated with Corpbiz

Atul Shukla is a seasoned fintech and regulatory expert with years of experience helping startups and financial institutions navigate India's complex licensing and compliance landscape. At Corpbiz, he specializes in NBFC registration, P2P lending licenses, Account Aggregator licensing, and digital finance regulations. His practical and simplified approach to financial compliance makes him a go-to advisor for new-age loan companies in India.

How Does Legal Metrology Ensure Consumer Protection?

When we buy a product, whether it is a packet of rice, a gas cylinder, or a weighing machine, we expect the quantity and measurements to be correct. But how can we be sure that we are getting what we paid for? This is where Legal Metrology comes in. Legal Metrology is a system that helps protect consumers by making sure all weights and measurements used in trade are correct and reliable.

In India, Legal Metrology is governed by the Legal Metrology Act, 2009. This law sets rules for weights and measures to prevent cheating and to promote fairness in trade. In this blog, we will explain how Legal Metrology works, how it protects consumers, and what registrations and certificates are needed for businesses to comply with this law.

What is Legal Metrology?

Legal Metrology deals with the accuracy of weights and measurements used in business. It covers things like weighing machines, fuel pumps, packaged goods, and more. The main goal of Legal Metrology is to make sure consumers are not cheated by wrong measurements.

For example:

• When you buy 1 kg of sugar, it should actually weigh 1 kg.
  
  
• When you fill petrol in your car, the meter should show the correct amount.
  
  
• When you buy a packaged item, the label should clearly show weight, quantity, price, and manufacturer details.
  
  

Why is Legal Metrology Important for Consumers?

Legal Metrology ensures consumer protection in the following ways:

1. Prevents Cheating

Legal Metrology helps prevent traders or manufacturers from giving less quantity than promised. For instance, without proper checks, a shopkeeper could sell 900 grams of sugar as 1 kg. Legal Metrology stops this kind of cheating.

2. Ensures Transparency

Every product must clearly display the weight, price, expiry date, and name of the manufacturer. This transparency helps customers make informed choices.

3. Improves Trust

When businesses follow Legal Metrology rules, it builds trust with consumers. People are more likely to buy from brands that follow the law.

4. Supports Fair Competition

Legal Metrology creates a level playing field for all businesses. Everyone must follow the same rules, which means no one can take unfair advantage.

What is a Legal Metrology Certificate Registration?

Every business that deals with weights and measurements must apply for a Legal Metrology Certificate Registration. This certificate proves that the business is following the Legal Metrology Act and rules.

There are different types of registrations based on the type of business:

1. Legal Metrology Manufacturer License Registration

If a business manufactures weighing machines, measurement devices, or any product that needs to follow weight or size standards, it must get a Legal Metrology Manufacturer License Registration.

This license allows them to:

• Make standard weight and measurement devices.
  
  
• Ensure their products meet legal accuracy levels.
  
  
• Sell these devices to customers or other businesses.
  
  

2. LMPC Certificate Registration

LMPC stands for Legal Metrology Packaged Commodities. If a business sells packaged goods like food items, electronics, cosmetics, etc., they must get LMPC Certificate Registration.

This certificate is needed by:

• Importers
  
  
• Manufacturers
  
  
• Packers
  
  

The LMPC certificate makes sure that all packaged goods have the correct labels showing:

• Weight or quantity
  
  
• Price (MRP)
  
  
• Manufacturing date and expiry date
  
  
• Manufacturer/importer name and address
  
  

Without this certificate, a business cannot legally sell packaged goods in India.

What is a Model Approval Certificate for Weight and Measurement Devices?

Before any new type of weight or measurement device can be sold in the market, it must get a Model Approval Certificate. This is a very important part of consumer protection.

Here’s how it works:

• The manufacturer designs a new type of weighing machine or meter.
  
  
• They send the model for testing to a Legal Metrology-approved lab.
  
  
• If the model passes the tests for accuracy and reliability, the government issues a Model Approval Certificate.
  
  

This certificate ensures that:

• The design and performance of the device meet Indian standards.
  
  
• Consumers get accurate and trustworthy results from the device.
  
  
• The device can now be manufactured and sold legally.
  
  

No device can be legally used or sold in India without this approval.

What Happens if Businesses Don’t Follow Legal Metrology Rules?

If a business does not follow the rules of Legal Metrology, it may face:

• Heavy fines
  
  
• Cancellation of license
  
  
• Seizure of goods
  
  
• Legal action
  
  

For example, if a business sells products with incorrect weight or missing labels, the Legal Metrology Department can take strict action. This helps keep dishonest businesses out and protects the rights of honest consumers.

How Can Businesses Get Legal Metrology Certificates?

To get the required Legal Metrology certificates, businesses must:

1. Apply to the Legal Metrology Department in their state or to the central government, depending on the product type.
   
   
2. Submit required documents like business registration, product details, manufacturing facility details, and testing reports.
   
   
3. Pay the government fee as per the rules.
   
   
4. Get inspection or testing done, if required.
   
   

After verification, the department will issue the certificate. It is important to renew these certificates on time and follow all compliance rules to avoid penalties.

Conclusion

Legal Metrology plays a very important role in our daily lives. It ensures that the weights, measurements, and labels we see on products are accurate and honest. This protects consumers from being cheated and builds trust in the market.

For businesses, it is necessary to get proper registrations such as:

• Legal Metrology Certificate Registration
  
  
• Legal Metrology Manufacturer License Registration
  
  
• LMPC Certificate Registration
  
  
• Model Approval Certificate for Weight and Measurement Devices
  
  

Following Legal Metrology rules is not just a legal requirement, but also a way to win the confidence of consumers. When businesses are fair and transparent, everyone benefits — customers, businesses, and the economy.

Need Help with Legal Metrology Registrations?
If you are a manufacturer, packer, or importer and want to apply for any Legal Metrology certificate, contact CorpBiz. Our expert team can help you with the complete process — from documentation to final approval.