Documents and Step-by-step process for NBFC registration.
Non-banking financial company (NBFC) is a financial institution that provides financial services to both individuals and business entities. Such financial services are similar to those of the banks, but do not require a banking licence, but are owned by NBFC License. NBFCs act as an alternative to banks, providing financial solutions to the unorganised part of the society.
List of Document & Basic Process for online A Non-Banking Financial Company (NBFC) Registration in India?
A Non-Banking Financial Company (NBFC) generally refers to financial institutions that do not have a banking licence or are not supervised by any national or international regulatory authority. Although these organisations provide banking services, but just don’t hold any license and do not accept any kind of deposits from the general public.
Enterprises are not NBFCs in India: the NBFC doesn’t include the corporations with the main business In India, as follows:
- Purchase & sell of all goods;
- The activity of agriculture;
- Purchase or Sale or Construction of a Property.
- Industrial activities;
Documents required for A Non-Banking Financial Company (NBFC) Registration:
Below is the list of documents required for the registration of an NBFC.
- Copy of MOA and AOA.
- Certificate of company incorporation.
- Information about the management along with the brochure of the company.
- List of directors’ profile duly signed by each director.
- CIBIL/credit reports of the Directors of the Company.
- Address proof supporting office location.
- A board resolution on the ‘Fair Practices Code’ is to be passed and the same copy should be attached along with the documents.
- Certificate issued by the auditor stating that the company does not hold the public deposit and does not accept it as well.
- A scan copy of the board resolution certifying that the company has not carried out or abruptly stopped any NBFC activity and will not carry any until the registration from RBI is granted.
- Information regarding the bank account, balances, loans, credits, etc. of the directors.
- Certificate specifying owned funds as on the date of the application from the Statutory Auditor.
- Audited balance sheet and profit and loss statement along with the directors and auditors report of the preceding three years.
- Self-certified copy of the bank statement and Income Tax Returns.
- Information specifying the company’s future plan, generally for the next 3 years, along with the projection of balance sheets, cash flow statement and income statement.
The step-by-step process for NBFC registration.
For any company to be registered as an NBFC a step-by-step process is explained below in detail.
- Register the company under the Companies Act 2013 or the old Companies Act 1956.
- The Net worth of the Funds owned by the Company should be INR 2 CR or more.
- At Least 1 director in the company should be from the same background.
- To register as NBFC a good CIBIL score is required.
- For filling the application form, visit RBI’s website and completely fill all the required fields.
- Once the submit all the documents along with the application form.
- After the submission of the application form, a CARN number will be generated.
- Then needed to Send the hard copy of the application to the regional branch of RBI.
- After the application is checked and verified, the License will be given to the company.
Process for NBFC Business Commencement: Pre Loan Disbursement Prerequisites: Before the newly licenced NBFC enters into operation, registrations from all of the following must be required:
- Registration by the Anti-Money Laundering Act;
- Adoption of the Code of Fair Practice.
- Credit rating agencies like CIBIL, ICRA, Equifax and Experian;
- Registration of CERSAI
In addition, all contracts and policies concerning all types of lending and lending procedures, organisational structure, recovery measures, etc. must be in place.
Minimum Capital Requirement for NBFC License Registration
The Minimum Capital needed for Non-Banking Financial Company license registration are as follows:
- 100% of foreign direct investment is Allowed
In Non-Banking Financial Company Sector 100% foreign direct investment is allowed from FATF member countries and under autoroute.
It shall mandatorily hold Net owned funds of Rs. 2 Cr at the time of registration and at all times thereafter. But you can use the minimum capital for the lending or investment purpose.
The Applicant will require to produce the Proof of tax payment against the capital invested in the Non-Banking Financial Company.
- The Minimum Paid-up Capital
The Net owned fund of NBFC-ICC (Investment Credit Company) must be more than INR 2 Cr over the life of the Non-Banking Financial Company’s unless otherwise prescribed the RBI.
Shareholders should introduce own INR 2 Cr as share capital, However, shareholders can give or take gifts from Close relatives or Spouse
- Required to Qualify the Quality of Capital Test
Reserve bank of India Conducts quality of capital test and ensure that Capital invested by the shareholders are free from any possible defects or non-compliance with Indian or international laws.
Reserve bank of India Only recognize and Approves Non-Banking Financial Company’s Registration or takeover from FATF Member Country Investment in India
Pre-Requisites for NBFC Registration
Basic Pre-Requisites for NBFC registration are as below:
- Targeting the Untouched Segment
- High-Level Business Plan
- Capital Test
- Profile of the Promoters
- Area of Operation
Functions & Role of an NBFC
- The function and mechanisms of the NBFC in India can be summed up as:
- Developing sectors such as infrastructure, education and small and medium-sized enterprises;
- To facilitate the creation of wealth;
- To generate significant employment;
- Provide the financial assistance to the economically weakest segment of society;
- To contribute to the economic growth of the nation;
- Make a contribution to the State Exchequer;
- To provide specialised credit;
- To lead to the growth of the financial market.
Focus areas of NBFC
NBFCs have expanded dramatically, as indicated by their structure of asset development over the past:
- Customized Loan Products: the needs of one customer are different from the needs of another customer and the funding requirements are as follows;
- Flexible interest rate: In line with banking channels, NBFCs are committed to serving competitive interest rates to customers;
- Quick disbursement of funds;
- Minimum documentation requirement;
- Going to serve the underprivileged section;
- Effective mechanism for recovery.
Different Categories of RBI NBFC Registration
Various kind of RBI NBFC registration are as below:
- NBFC-Peer to Peer Lending (P2P)
- Core Investment Companies (CIC)
- NBFC-Account Aggregators
- Investment and Credit Company (ICC)
- NBFC-Microfinance Companies (MFIs)
- Infrastructure Finance Company (IFC)
Basic Principal Business of an A Non-Banking Financial Company (NBFC) in India
- Marketplace Lending (Digital Lending );
- Gold Loan;
- NBFC must maintain 50% of its assets as Financial Assets and 50% of its income must be generated from Financial Activity.
- Investment in Shares or Mutual Fund or Debentures;
- Secured Loan (LAP);
- Unsecured Personal & Business Loan;
Powers of RBI to Non-Banking Financial Company(NBFCs): the powers of the RBI to Non-Banking Financial Company in India, can be summed up as:
- Inspects and exercises surveillance over Non-Banking Financial Company’s to verify whether or not they comply with the terms of the RBI Act, 1935;
- It helps to regulate the registration process for Non-Banking Financial Companies;
- It sets out the directions for the police and issues Non-Banking Financial Companies;
- It penalizes Non-Banking Financial Company’s for violating rules of the RBI Act, which may also outcome in the cancellation or suspension of the Non-Banking Financial Company
Compliances under Non-Banking Financial Company after RBI Approval:
After the one-time Non-Banking Financial Company Registrations, all the non-deposit accepting Non-Banking Financial Company’s shall be responsible for maintaining certain annual compliances as below:
- Income Tax Returns and GST Returns;
- Maintenance of proper accounts;
- All such compliances as may occur from time to time.
- Needed to Filing of NBS-9 on online RBI portal i.e. COSMOS;
- Timely compliance & meet, with maintain 50:50 PBC Criteria
- ROC Filings such as Annual Returns, Balance Sheets, Profit and Loss Accounts, etc;
- Appointment of Statutory Auditor;
- Adopt Fair Practice code as prescribed the RBI and Also Adopt NBFC Prudential norms as prescribed the RBI.
Registration for an NBFC should be as per the guidelines prescribed by the auditor. For professional help and trained expertise, contact the professionals at www.carajput.com
RBI on Thursday directed credit information companies (CIC) to provide free credit reports in full to individuals whose credit score is maintained with the agency, effective January 1.
RBI has issued a master circular – Non-Banking Financial Company –Non-Systemically Important Non-Deposit taking Company (Reserve Bank) Directions, 2016 vide Master Direction No. DNBR.PD.007/03.10.119/2016-17 dated 01/09/2016.
RBI has issued a master circular – Non-Banking Financial Company-Systemically Important Non-Deposit taking Company and deposit taking company (Reserve Bank) Directions, 2016vide Master Direction No. DNBR.PD.008/03.10.119/2016-17 dated 01/09/2016.
RBI came up with a discussion paper on peer-to-peer lending (P2P), seeking to regulate the fast emerging crowd funding platforms as the new financing model has assumed importance too significant to be ignored.
RBI/2017-18/57A. P. (DIR Series) Circular No. 04 September 15, 2017 ToAll Category – I Authorised Dealer Banks Madam / Sir Export Data Processing and Monitoring System (EDPMS)Issuance of Electronic Bank Realisation Certificate (eBRC) Attention of Authorised Dealer Category-I (AD Category-I) banks is invited to the provisions contained in the&n
All peer-to-peer lending (P2P) platforms will be regulated by the Reserve Bank of India (RBI), according to a government of India notification released on Wednesday. The gazette notification stated that all the P2P loan platforms will be treated as non-banking financial companies (NBFCs) and will be brought under the ambit of the banking regulator..
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