16.4 Industry-specific compliance diligence

A borrower’s industry shapes the licences they must hold to operate legally. Lending to a borrower whose primary licence has expired, been suspended, or was never obtained creates a legal-risk exposure — at minimum the loan economics may collapse if the business is shut down; at worst the lender’s involvement may be questioned.

This page is the industry-by-industry checklist of compliance items to verify.

How the platform routes

The platform identifies the borrower’s primary industry by:

NIC code from GST / Udyam.
Borrower-declared business description.

The decisioning engine then applies the industry overlay with industry-specific compliance rules added.

Manufacturing (general)

Required licences (depending on plant size and category)

Pollution Control Board (PCB) consent — Consent to Establish (CTE) + Consent to Operate (CTO) from State PCB. Categories: Red (most polluting), Orange, Green, White. Red and Orange require ongoing renewal.
Factories Act licence — for plants employing above worker thresholds (state-specific; typically > 10 workers with power or > 20 without).
Building plan approval from local authority for the plant building.
Fire NOC from fire department.
Boiler licence if boilers used.
Industrial entrepreneur memorandum (IEM) for some categories.

Verification

Borrower-uploaded copies + verification at State PCB portal (where available) / Factories Inspector portal.
Field-FI agent observes licences displayed on premises.

Decline triggers

Red-category industry with expired or suspended PCB consent.
Major Factories Act non-compliance with pending prosecution.
Plant operating without required NOC.

Pharma manufacturing

In addition to general manufacturing:

Drug Manufacturing Licence from State Drug Controller — Form 25 / 28 etc., category-specific.
WHO-GMP certification for export-oriented pharma.
GLP / GMP specific certifications.
CDSCO approvals for specific products.

Drug manufacturing without licence is criminal; decline immediately.

Pharma distribution / wholesale

Drug Licence (Form 20B / 21B) — distributor / wholesaler licence from State Drug Controller.
GST registration.
Cold-chain compliance for relevant SKUs.

Lapsed Drug Licence → DECLINE.

Food processing / FMCG manufacturing

FSSAI licence — state or central (depending on turnover).
State PCB consent.
Factories Act licence.
Specific category approvals (organic certification if applicable, etc.).

FSSAI lapse → DECLINE for active business.

Restaurants / hospitality / cloud kitchens

FSSAI registration / licence — applicable to all food businesses.
Shops & Establishment registration (state-specific).
Health licence from local municipality.
Fire NOC (premises).
Liquor licence (if applicable; state-specific).
Live entertainment licence (if applicable).

Multi-licence segment; verify primary licences at minimum.

Education / coaching / training

State Education Department recognition for schools / colleges.
AICTE / UGC approval for technical / higher education.
Skill-development approvals for vocational.
Shops & Establishment for coaching centres (usually private).

Coaching / private classes typically only require Shops & Establishment + GST; recognised institutions need more.

Healthcare (clinics, diagnostic centres, hospitals)

Clinical Establishments Act registration (state-specific; where notified).
Pre-Conception and Pre-Natal Diagnostic Techniques (PCPNDT) Act — for diagnostic centres performing relevant tests.
PNDT registration if ultrasonography.
Biomedical Waste authorisation from State PCB.
Doctor / paramedic registration (relevant qualifications).

Healthcare often has multiple required licences; assess primary ones for the specific business type.

Transport / logistics

Vehicle registration certificate (RC) for each vehicle.
Permits — National / All-India Tourist Permit / Goods Permit (per type and route).
Driver’s licence for drivers.
Pollution Under Control (PUC) certificate.
Vehicle insurance.
Transporter’s GST registration + e-way bill compliance.

For fleet operators borrowing against working capital, fleet documentation matters.

Construction / real estate

Builder / Developer registration under RERA (mandatory for projects above thresholds).
Building plan approval for each project.
Environmental clearance for large projects.
Local body NOCs.

Real-estate sector has elevated regulatory scrutiny and many sub-segments are on negative lists; verify lender’s sector policy.

Telecom / IT services

DoT licences (UASL / IP-1 / IP-2 / VNO etc.) for telecom operators / ISPs.
SEZ / STPI registration for software exports.
IT-BPO category specific approvals.

Most pure-software companies have minimal licence requirements; verify per business model.

Finance / regulated sub-segments

Lending business (NBFC) requires RBI CoR.
Insurance broking requires IRDAI registration.
Securities advisory requires SEBI registration.
AIF requires SEBI AIF registration.

Generally avoid lending to other regulated finance entities except where the lender’s product is specifically designed for them.

Mining / quarrying

Mining lease / quarrying permit from State.
Environmental Clearance under EIA notification.
Forest Clearance if forest land involved.
Consent to Operate from PCB.

Mining is typically on negative lists for SME WC lenders due to regulatory volatility.

Telecom retailer / mobile recharge / KYC point

Telecom KYC certification for distributors / retailers.

Petrol pump / fuel retailer

Fuel-dealership licence from OMC (oil marketing company).
Explosives licence for storage above thresholds.
PCB consent.

Agriculture-allied businesses

Seed licence for seed traders.
Fertiliser licence for fertiliser traders.
Insecticides / pesticides licence if dealing.
APMC / mandi licence for agri trading.

Agriculture-allied sub-segments have many state-specific licences; verify per business activity.

Liquor / tobacco / lottery

Excise licence for liquor trading.
Tobacco licences (state-specific).
Lottery is heavily regulated and often on lender negative lists.

These are commonly on the lender’s negative list.

Hazardous waste / chemicals / dyes

Hazardous Waste Management Rules authorisation.
PCB consent for hazardous categories.
Storage / transport rules.

Specialised category; specific PCB compliance.

What the platform must do

NIC-code-driven compliance rule set — automated based on borrower’s primary NIC code.
Field-FI questionnaire variant per industry — agent’s checklist differs by industry.
Document upload prompts per industry.
Validation against issuing authority portals where APIs available.
Compliance-renewal-due tracker for active borrowers (FSSAI / Drug / PCB renewals).

Decline triggers (common across industries)

Required primary licence absent or lapsed.
Pending regulatory action / show-cause.
Industry on the lender’s negative list (e.g., gambling, certain real estate, regulated chemicals).
Borrower operating in jurisdiction where the lender doesn’t operate.

Renewal tracking

For active borrowers in licence-heavy industries:

Track licence expiry dates.
Alert borrower 60 days and 30 days before expiry.
Re-verify on renewal.
Treat licence lapse during loan life as a credit-event trigger (REFER to risk).

Compliance touchpoints

DPDP — collecting licence documents involves personal data; treat with retention discipline.
Outsourcing MD — vendors verifying licences are governed.
Fair Practices Code — borrower must be informed if licence absence / lapse drove a decline.

16.1 Pre-application diligence.
16.6 Physical verification protocols.
3.E Underwriting engine — where the industry overlay rules live.
6. Underwriting — segment overlays.