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NBFC: Complete Checklist & Registration Procedure

NBFC Registration Process & Checklist in India

NBFC: Complete Checklist & Registration Procedure

Tuesday June 18, 2019,

4 min Read

NBFC, stands for Non-Banking Financial Companies are establishments that offer banking and financial facilities without meeting any designated legal definition of the Bank. All NBFC companies are capped under the Banking regulations which are significantly laid down by the Reserve Bank of India. These companies are entitled to assist people with critical banking services such as credit, loans, retirement planning, stocking, investing and other TFCs. However, it should be noted that any NBFC registered company are restricted or refrained from taking any deposits from the general public. The whole agenda of NBFC establishments are to contribute in the economy of India, which is done by helping both urban and rural population in their immediate financial needs. Granting loans is the foremost agenda of NBFC companies so as people are facilitated with their needs on time and at better interest.

Here’s all you need to know about NBFC Registration:

Before functioning as NBFC, you are required to attain a certificate of registration from the RBI, and comply with the below mentioned conditions:

  1. Your company should be registered under the Section 3 of the followed companies Act, 1956.
  2. Your company should have a minimum net owned fund of at least two crore.

There are two types of NBFC companies, listed as below:

NBFC accepting deposits :-

These licensed companies by the RBI can basically accept deposits from the public. This includes investment companies, loan companies, and assets finance companies.

NBFC functioning without deposits :-

Other than paying back borrowed money, these companies can only perform money lending facilities, but cannot accept any deposits from any individual.

Classification of NBFCs:

  • Investment Companies
  • Loan Companies
  • Finance Companies

Regulations on NBFC: All the regulations on NBFC are mandated by the Ministry of Corporate Affairs. Few of these regulations are listed as below:

  1. NBFCs Registered with RBI- Supervision, Enforcement, Regulation and Surveillance under the RBI or Reserve Bank of India.
  2. NBFC companies as supervised by other regulators
  3. Housing Finance Companies-National Housing Bank
  4. Venture Capital Fund/ Collective Investment Schemes/Merchant Banking/Stock Broking-under the Exchange and Security Board of India
  5. Mutual Benefit Companies and Nidhi Companies -Ministry of Corporate Affairs
  6. State Government designated companies i.e. Chit Fund Companies
  7. Insurance Companies- Development Authority and Insurance Regulatory companies
  8. Non Financial and Non Banking Companies- Supervision, Surveillance and Regulation under the designated Companies Act of 1956.

Please note that the enforcement agency of all NBFC companies is the State Government, on the other hand, the regulatory agency is the Ministry of Corporate Affairs.

Requirements for registering as a NBFC company:

  1. The applicant company should be registered under the provisions, rules and regulations of the details as specified under the Companies act of 2013 or previously followed Companies Act of 1956.
  2. If any company is able to generate a solid financial flow of more than 50% from its initial capital investment, then the NBFC certification is mandatory.
  3. The paid-up capital of the company applying for NBFC registration should be at least be 2 Crores. In case a foreign company is applying for the NBFC registration then the paid up equity share capital should be around 5 crore.
  4. It should be noted that at the time of applying for the NBFC registration, the net equity fund should be reserved as an evidence of eligibility of NBFC certificate in the bank account.

Registration Process:

  1. All relatable documents as mentioned on the website should be attested and uploaded in the prescribed format. Upon successful submission, you will be provided with a Company Application Reference Number.
  2. Copy of the above, and all demanded documents have to be submitted to the regional office of RBI.
  3. Upon successful verification of the entire documents, the regional office of RBI will send all the information to the central office of RBI.
  4. If all the eligibility criteria are met, i.e. mentioned under the 45-I A of the Reserve Bank of India Act, 1934, then, you will be able to get your NBFC registration certificate.

General Information for any finance seeking aspirant:

In case you are approaching an NBFC company and preparing to borrow some money/deposit, then here are few of the things to note:

  1. NBFCs should be able to present Certificate of Registration of CoR as issued by the Reserve Bank of India. This would also be displayed on their website or office.
  2. The NBFC registered for accepting the deposits should be authorised by the RBI specifically.
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