Once a startup has determined whether to operate as an LSP or pursue an NBFC license, the next stage is to establish its legal and regulatory foundation. This step involves core registrations with statutory authorities, securing RBI approvals where applicable, and preparing the governance framework for long-term compliance. The precise obligations vary significantly depending on whether the entity is operating as an LSP or as an NBFC.
While LSPs are not licensed directly by the RBI, they must ensure corporate legitimacy through statutory registrations and operate in conformity with RBI's (Digital Lending) Directions, 2025, as these obligations flow through their partner NBFCs and banks. NBFCs, by contrast, are directly licensed and regulated by the RBI and are subject to extensive pre-registration scrutiny and continuous compliance obligations thereafter.
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⚖️ This step represents the legal foundation of the compliance journey. Entities must ensure readiness at incorporation and licensing before moving to operational obligations under RBI’s Digital Lending Guidelines.
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Entities should comply with the following statutory and regulatory instruments for ongoing reporting and compliance:
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⚠️ Note the disclaimer regarding the document's limitations and the need for professional legal advice.
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Once your entity is lawfully registered, the next step is to align with RBI’s Digital Lending Guidelines on fund flows, disclosures, and borrower protection. Proceed to the Next Step - Step 3 : RBI’s Digital Lending Guidelines.
Or return to Step 1: Choosing Your Model.
Or navigate back to the Toolkit Homepage or revisit the full Compliance Journey Flow.
Need clarification on terminology? Refer to our comprehensive Glossary.