Online Procedure & Documents Required for NBFC Registration in India

Online Procedure & Documents Required for NBFC Registration in India

Every NBFC, to carry out its operations, is required to obtain a license from RBI. In other words, any establishment desirous of starting the business of NBFCs shall apply to RBI for obtaining permission to operate as NBFCs and must be registered with RBI as an NBFC. It is, therefore, essential to know how to register an NBFC.

Non-Banking Financial Companies (NBFCs) have been making outstanding contributions to India’s economy. However, the Reserve Bank of India (RBI) still controls the working of all NBFCs under the framework of the RBI Act, 1934 and directions issued by it from time to time.

Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 involved in the principal business of lending, investments in shares/stocks/bonds/debentures, leasing, hire-purchase, insurance business, chit business or engaged in the receiving of deposits under any scheme or arrangement. NBFC is under the purview of the Reserve Bank of India (RBI), and in this article, we visit the procedure for NBFC Registration in India and some of the regulations which govern its operations.

NBFC Registration from RBI

As per Section 45-IA of the RBI Act, 1934, no company can commence or carry on the business of a non-banking financial institution without obtaining a certificate of registration and without having a Net Owned Funds of Rs. 200 lakhs. The requirement for registration as an NBFC is a company incorporated under Section 3 of the Companies Act, 1956 and have a minimum net owned funds of Rs.200 lakhs. Net owned funds is the balance of “owned funds” minus the amount of investment in shares of subsidiaries, companies in the same group and all other NBFCs, book value of debentures, bonds, outstanding loans and advances including hire purchase and lease finance made to and deposits with subsidiaries and companies in the same group. Owned funds is the aggregate of paid-up equity capital , preference shares which are compulsorily convertible into equity, free reserves , balance in share premium account and capital reserves representing surplus arising out of sale proceeds of asset, excluding reserves created by revaluation of asset, after deducting therefrom accumulated balance of loss, deferred revenue expenditure and other intangible assets.

Application for becoming an NBFC must be made in the requisite form to the Regional Office of the Reserve Bank of India. A list of documents required to be submitted along with the NBFC application can be accessed here: NBFC List of Document Required.

What are the different types of NBFCs?

Following are the types of NBFC’s:

1. On the basis of the nature of Activity

 

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

 

2. On the basis of Deposits

 

  • Deposit Accepting NBFCs
  • Non-Deposit Accepting NBFCs

 

NBFC Registration Procedure in India

A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 2013 engaged in the Business of loans & advances, acquisition of shares / stocks / bonds / debentures / securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business,chit business.

The non-Banking Financial Companies do not possess proper banking licenses like the commercial banks but (after getting NBFC License from RBI) offer a verity of very supportive and helpful services to public depositors borrowers and investors in some selected areas of Business.

  • An online application is to be made in the prescribed format with information regarding the demanded documents and enclosures, which generates a Company Application Reference Number.
  • A hard copy of the application mentioned above along with demanded documents and enclosures to the concerned Regional Office of the RBI.
  • After the verification and approval of the submitted application and documents, the regional office sends the request for an application form to the Central office of RBI, which goes through crucial examination to grant the Certificate.
  • If the terms and conditions under section 45-I A of the RBI Act, 1934 are fully satisfied, the Certificate will be granted.

 

NBFC Registration Procedure (How to Get NBFC License from RBI?)

 

RBI has simplified NBFC Registration Procedure by providing an online platform to applicants. An existing company or a newly incorporated Company under companies Act 2013/1956 needs to go through the following Registration process to get a license from RBI

 

  • The applicant company incorporated under the Companies Act 2013 is required to apply online. The application can be submitted online by accessing RBI’s secured website - https://swaritadvisors.com
  • The company can download a suitable application form from the above website, key in the data, and upload the application form.
  • After filling the online application, the company has to submit the hard copy of the application form (indicating the online Company Application Reference Number, along with the supporting documents, to the concerned Regional Office of RBI.
  • The company can then check the status of the application from the above mentioned secure address, by keying in the acknowledgment number.
  • The license will be granted only after careful inspection of the application and documents attached to it.

 

Non-Banking Financial Company (NBFC) licensing Criteria

 

Any entity desirous of securing the NBFC license must fulfill the following two criteria :

  • It should be a company incorporated under the Companies Act, 2013/1956.
  • It should be a company having minimum net owned funds of INR 2 Crores.

 

Documents Required for NBFC Registration

Significant documents required for NBFC Registration in India are as follows:

 

  • Documents related to the administration and management of the company
  • Company Incorporation Certificate
  • The MoA and the AoA of the applicant company or firm
  • Documents describing the location of the company
  • Detailed information about Directors or Partners of the Company
  • Accounts of the company well-audited for last three consecutive years
  • Board Resolution in favor of NBFC formation
  • Bank Account with a minimum paid-up equity share capital of INR-2 Crore
  • Income-tax PAN, etc.
  • Other relevant documents on request

Conclusion

From the above discussion, we can conclude that Non-Banking Financial Companies (NBFCs) Registration is one of the crucial certifications that every company must get after the incorporation. The identity of any company is a personal asset, and it must be protected at any cost.

With NBFCs Registration, any company can provide finance & loan. The non-Banking Financial Companies do not possess proper banking licenses like the commercial banks but (after getting NBFC License from RBI) offer a verity of very supportive and helpful services to public depositors borrowers and investors in some selected areas of Business.

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riya

riya 23 days ago

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