NBFC Registration - All You Need to Know

We are an action-oriented firm, who will invest their sustain efforts in completing the registration of NBFC by focusing on reliability, adaptability, and transparency. To know more about NBFC registration in India, contact us immeditely.

What is NBFC?

Non-Banking Financial Companies (NBFC) are companies incorporated under the Companies Act, 1956 who are engaged in activities such as loans and advance, acquisition of bonds or shares or securities or debentures that are issued by Government or local authority or other marketable securities.

However, it does not encompass institutes whose fundamental business is, 

  • Industrial activity
  • Agricultural activity 
  • Sale or purchase of goods  

In simple words, NBFC is engaged in business activity such as receiving deposits under any scheme or arrangement in a lump sum or installments as a contribution or other manner. 

What legal action can be taken against the financial companies that claim to be regulated by RBI?

Assuredly, registration of NBFC under RBI is mandatory. However, if a financial company or person fails to do so and claims to be regulated by the RBI has to face a penalty, fine, and can be prosecuted under the court of law.

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Types of NBFC

1. Asset Finance Company (AFC)

It’s a company whose fundamental business is to engage in the financing of the corporeal assets to support economic or productive activity.  

Additionally, for this purpose, the fundamental business is determined as an aggregate of financing real or physical equipment assets for supporting economic activity and income. Thus, the total asset and income should not be below 60%, respectively.

2. Loan Company (LC)

The fundamental business of a loan company is providing the finance either by making loans/advances or for activities other than its own. However, it should not include Asset Finance Company.

3. Investment Company (IC)

An investment company is a company that is engaged in the business of the acquisition of securities.

4. Infrastructure Finance Company (IFC)

IFC is an NBFC that utilizes 75% of the total assets in the infrastructure loans along with this it comprises a minimum NOF of Rs 300 crore. Also, it consists of a credit rating of at least “A” or equivalent and a CRAR of 15%.  

5. Infrastructure Debt Fund: Non-Banking Financial Company (IDF-NBFC)

IDF-NBFC is the company engaged in the flow of long-term debt in an infrastructure project. It raises the resources through the issuance of Rupee or Dollar denominated bonds of at least 5 years of maturity. 

To be noted, Infrastructure Finance Companies (IFC) is the only authority that can sponsor the finances of IDF-NBFC.

6. Systematically Important Core Investment Company (SIC-ND-SI)

It deals in the acquisition of shares and securities that satisfy the below-mentioned conditions,

  • Accept public funds
  • Holds not less than 90% of total assets in the form of investment in equity shares, debt or loans, preference shares of the group of companies. 
  • The size of assets is Rs 100 crore or more.
  • Investment in equity shares in the companies group is not less than 60% of the assets of its total assets.
  • It refrains from carrying out the financial activities mentioned in Section 45 (c) and 45 (f) under RBI Act 1934, excluding investment in bank deposits, government securities, money market instruments, investment in and loans to debt issuances of companies/group or guarantee provided on the behalf of group companies.
  • It should not trade its investment in debt, shares, or loans in the group companies, excluding block sales with the motive of dilution or disinvestment.
7. Non-Banking Financial Company-Factors (NBFC-Factors)

It is a non-deposit company that is engaged in the business of factors. The financial assets under NBFC-Factor should comprise a minimum of 50% of its total assets and its income should constitute a minimum of 50%.

8. NBFC- Non-Operative Financial Holding Company (NOFHC)

Under this, the promoter or promoter’s groups are sanctioned to establish a new bank. This company has the authority to hold banking services along with other financial activities (regulated by RBI or other financial sector regulators) because it is a completely owned Non-Operative Financial Holding Company (NOFHC).

9. Mortgage Guarantee Company(MGC)

MGC is the company that constitutes a minimum of 90% turnover in the mortgage business or constitutes at least 90% of gross income that comes from the mortgage guarantee business. Also, it has NOF of Rs 100 crore.

10. Non-Banking Financial Company- Micro Finance Institution (NBFC-MFI)

 NBFC-MFI is the non-deposit that comprise at least 85% of its assets in the nature qualifying assets that fulfill the following requirements,

  • The total debts of the debtor should not be increased beyond Rs 1,00,000.
  • The loan should be extended without any mortgage.
  • The loan disbursed to a debtor who comprises the rural household annual income, not above Rs 1,00,000, and the semi-rural household annual income should not be more than Rs 1,60,000.  
  • The loan should be repaid by the choice of a debtor, it could be weekly, biweekly (once every two weeks), or in monthly installments.
  • In the first cycle, the amount of loan should not be more than Rs 50,000 and in a successive cycle, the loan amount should not exceed Rs 1,00,000.
  • If the loan amount is more than Rs 15,000, the duration of the loan should be at least 24 months along with prepayment without penalty.
  • The aggregate loan amount provided for income generation should be at least 50% of the total loan provided by MFIs.

Be it any type of NBFC, we assure to provide our 100% assistance in registration of NBFC by ensuring transparency and reliability. Moreover, we will invest our time and efforts to complete the NBFC registration in India while ensuring utmost convience of our clients because we value our client's needs and time.

Prerequisite For NBFC Registration

A company incorporated under the Companies Act 1956 with the need for commencing non-banking financial institution as explained under the Section 45 I(a) of RBI Act, 1934 a company should abide by

A company should be registered under Section 3 of the Companies Act, 1956.

A company should have a minimum NOF (Net Owned Fund) of Rs 200 lakh.

Documents Required For Registration of NBFC

  • Photocopy of certificate of incorporation of a company.
  • Replica of PAN or CIN that is allotted to the company.
  • Photocopy of extracted MoA to reflect the main clause concerning financial business. 
  • Details of directors along with their signature.
  • Replica of cost of the fixed deposit receipt and bankers certificate specifying balances in the support of minimum NOF of 2 crores. 
  • CIBIL data of the company’s directors.
  • In case, the company already exist, you are required to submit,
  1. Profit and loss account
  2. Audit balance sheet  
  3. Report of directors and auditors (of last 3 years of the company or complete period of the existence of a company, whichever is less)
  • Apart from this, you are required to submit the board resolution, as mentioned below,
  1. Before getting registered from RBI a company is not carrying any NBFC activity and will not begin the same.
  2. The company does not have a customer interface nor will face a customer interface in the subsequent future without the consent of RBI.
  3. The company is required to prepare a “Fair Practices Code” as prescribed by RBI. 
  4. The UIIBs in the group where the director has a considerable interest; or else accept public funds earlier nor hold any public deposit on the date and won’t accept any in future. 
  5. A company should not accept any public fund formerly nor should accept the public fund in the future as on the date and in the future without the consent of the RBI.

Accordingly, our team guarantees to assist you in the process of documentation of NBFC registration to avoid every possible inaccuracy. Thus, we will ensure a smooth procedure. 

To make the NBFC registration process easy, our team will educate you concerning every aspect of the registration of NBFC without any hassle and challenge as we comprise the experience of 8+ years. Above all, we guarantee to avoid any inaccuracy.

NBFC Registration Process

The application needs to be submitted online.

After the submission of the application an application reference number (ARN) will be issued by the RBI to track the status of the application.

Now, a copy of the application along with the necessary documents will be submitted to the Regional Office of the RBI.

Finally, the application will be reviewed by the RBI to verify the Company’s Profile, a profile of Directors or Promoters, and Shareholders.

If an application satisfies the standards laid by RBI, the NBFC license will be obtained.

JR Compliance consists of a team of experts who understands your business and provides you with the most satisfactory solution to your query regarding registration of NBFC. Not only this, but we will assist you throughout the NBFC registration process because we care about our clients, that’s why we comprise all the resources and experts to provide 100% assistance.

Our team has provided exemplary services to our valuable clients by ensuring proper coordination, follow-ups, and acknowledgment while completing the registration of NBFC.

Our Role in Registration of NBFC

We will assist you in the process of documentation and evaluation of NBFC registration in India. 

Our consultants will provide you complete assistance in filling the application for the NBFC registration.  

We will coordinate with RBI officials to ensure proper coordination in order to avoid inaccuracy in registration of NBFC which could result in the rejection of an application.  

We will assist you in keeping the track of the status of an application.

Our expert team will fulfill all the startled requirements if asked by RBI.

In case of any query, we will provide you with the best solution to your concerns regarding registration of NBFC.

Conclusion

To recapitulate, filling for the registration for the NBFC could be tedious for the company as it involves various processes such as documentation, filling the application, providing information if asked by RBI, etc.

Consequently, to make the NBFC registration process easy, contact our professional team who will provide you high standard services throughout the process. Along with that, our expert team will assist you in the process of documentation, evaluation, and tracking the status of your application.

Hence, for expert and professional services, contact us immediately.

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