Meanwhile, found this previous post with few details on this aspect,
including what is permitted/prohibihted for such an entity
(eg. one cannot actively seek new investors/capital in the business promising returns from trading the markets).
Financial activity as principal business is when
- a company’s financial assets constitute more than 50 per cent of the total assets
(netted off by intangible assets)
and- income from financial assets constitute more than 50 per cent of the gross income.
A company which fulfils both these criteria needs to get registered as NBFC with the Reserve Bank.
The same “50-50 test” is called out in few other other articles on this topic online [1] [2] [3].