NBFC: Complete Guidance on Imitating Non-banking Finance Company in India

NBFC is the most popular and common terms who want to initiate a finance or lending business. While in India they are doing well, there is a growing interest in the country to register new companies. In the last few years, the incorporation procedure of NBFC under companies has have been simplified, and it can be registered with MCA without the prior approval from RBI. After establishment, you need to approach RBI office for Cor. You can begin any lending business in India without a Valid NBFC license from RBI. The Registration procedure of NBFC begins with name approval of the purposed company. Ensure that in Inc-1 the ultimate goal of your corporation is financing.

Types of NBFC Registration in India

One can register an NBFC in India in 90 to 120 Working days and begin finance business. New NBFC registration is highly prescribed over the NBFC takeover. NBFC registration holds a few processes; the process start with the State of Capital test and Business Planning, there after Profile Assessment, submit experience in finance, go through the Eligibility test of Business and Public interest concern of the Regulator. When you pass altogether, Cor may be issued by the Department of Non-Banking Regulation.

In India, Section 45-IA of the RBI Act of 1934 rules the NBFC registration, and companies are registered as per the rules, provision, and regulations of these sections. The registration is categorized into two types – nature of the activity and the other is on deposits

Types of NBFC companies as per the nature of activity

  • Mortgage Guarantee Company
  • Asset Finance Company
  • Core Investment Company
  • Microfinance Company
  • Housing Finance Company
  • Investment Company
  • Loan Company
  • Infrastructure Finance Company

On the basis of deposits

  • Companies eligible to accept deposits
  • Companies not eligible to accept deposits

Registration Process of NBFC

Go through the RBI’s website www.rbi.org.in.

File here an online application

After the submission, you would receive a reference number to help inquiry in the future

Now, submit the photocopies of your business documents to the concerned regional office of RBI as a hardcopy.

The regional office will verify your documents. And, after verification, the regional office will transfer the application for NBFC registration to the central office.

If you satisfy all the all prescribed things in the section 45-IA, of its act of 1934, the central office of RBI grants the NBFC registration

The RBI regulates and oversees NBFC Registration in India. If any unincorporated thing or an NBFC without authorization to gain deposit is found receiving public deposits, it is subject for criminal action.

Eligibility Criteria

Basic criteria are for NBFC registration is as follow:

  • Your corporation needs to be registered in India as Pvt. Ltd. or Ltd. Company.
  • Your company must hold a minimum Net Owned Fund of Rs.200 lakhs. Here, the Net Owned Funds are calculated on the basis of the last audited balance sheet of the Company.
  • Important Documents for NBFC Registration
  • Certified Copy of Registration Certificate
  • Submit updated KYC & Income proof of Directors and Shareholders of the company
  • Net worth Certificate
  • Collect updated net worth certificate of Directors, Shareholders, and Company head
  • Clean Banker Report
  • Proof of Education Qualification
  • Credit report of Directors and shareholders
  • Experience in the financial sector
  • Present the profiles of Directors with 10+ years’ experience in the financial field
  • Submit the complete detailed plan about your loan products, fair practice code, credit, and risk assessment policy of your company
  • Provide organizations structure and decision-making process

Registration Fees

To register as NBFC, you should hold minimum capital of Rs. 2 cr; therefore, you need to register the company with the prescribed capital and the requisite government fees

Who does not Require NBFC Registration?

Here, there are several types of companies who do not need NBFC license to operate. The list is mentioned below:

Housing Finance Companies: It is regulated by the National Housing Bank.

Insurance Companies: Insurance Regulatory and Development Authority of India (IRDA) controls all insurance companies.

Stock Broking: Stock Broking is managed by Securities and Exchange Board of India.

Merchant Banking Companies: When it comes to Merchant Banking Companies, they are functioning under the Securities and Exchange Board of India.

Venture Capital Companies: Securities and Exchange Board of India regulates all Venture Capital Companies.

Companies with Collective Investment Schemes: They are regulated by the Securities and Exchange Board of India.

Mutual Funds: Mutual Funds work under the control of Securities and Exchange Board of India.

Nidhi Companies: They are regulated by the MCA.

Bottom Line

The pathway of building the business of an NBFC is neither too comfortable nor very difficult. The government has come with much leverage to promote NBFC Registration at the present time. Although, a few regulations are essential in order to ensure smooth functioning of the financial system of the country.

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