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Procedure, Categories and Types of NBFC Registration

Banks aren't present everywhere. Hence, there's quite a need for banking institutions in many areas. With the increasing demand for loans and advances, NBFCs are growing and expanding at a great pace.

Procedure, Categories and Types of NBFC Registration

Tuesday December 18, 2018,

5 min Read

Procedure, Categories and Types of NBFC Registration
Procedure, Categories and Types of NBFC Registration

NBFC Registration is the foremost step to start a finance company in India. NBFC stands for Non-Banking Financial Companies which is an important part of the rapidly-growing Indian economy. The company offers every service that a bank does including offering loans, accepting deposits, giving cash advances, financial inter-mediation, hire purchase, leasing, etc.

Banks aren't present everywhere. Hence, there's quite a need for banking institutions in many areas. With the increasing demand for loans and advances, NBFCs are growing and expanding at a great pace.

NBFCs are classified into two categories:

  • Deposit-taking Non-Banking Financial Company [NBFC-D]
  • Non-Deposit taking Non-Banking Financial Company [NBFC-ND]

Deposit-taking NBFCs can raise funds from the public (directly or indirectly) and can freely lend them to ultimate spenders. NBFC is sweeping the popularity among the businesses because of the attractive interest rates on the investors' deposits.

Thus, if you're preparing yourself for starting an NBFC, then do consult Enterslice. Enterslice is one of the best NBFC consultants in India consisting of a team of experts who are always available to support their customers. Our experienced and highly trained staffs don't leave any room for complaints and help customers to clear their doubts completely. We assure you guaranteed NBFC registration for your business.

In this blog, we will cover various aspects of NBFC along with the NBFC procedures as follows:

  • Categories and types of NBFC registration
  • Procedure for NBFC registration in India
  • Why should you opt for fresh NBFC Registration instead of NBFC takeover?
  • NBFC compliances after COR

Categories and types of NBFC Registration

·        Categorization of NBFC

Typically, an NBFC can be categorized into two types:

1)  Deposit accepting NBFCs

2)  Non-Deposit accepting NBFCs

·        Types of NBFC Registration

There are ten types of NBFCs in India as follows:

1.  Asset Finance Company (AFC)

2.  Investment Company (IC)

3.  Loan Company (LC)

4.  Infrastructure Finance Company (IFC)

5.  Systemically Important Core Investment Company (CIC-ND-SI)

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

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

8.  Non-Banking Financial Company – Factors (NBFC-Factors)

9.  Mortgage Guarantee Companies (MGC)

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

Procedure for NBFC Registration in India

As defined under Section 45 I (a) of the RBI Act, 1934, a company can only register itself as NBFC if it is already incorporated and has a minimum net owned fund of Rs. 2 crores. The steps for NBFC registration are as follows:

Step 1: Company Incorporation

The applicant's company must have the incorporation certificate under the Companies Act, 2013 or the Companies Act, 1956. The applicant needs to first obtain the company registration either as Private or Public Limited Company.

Step 2: Apply for online registration on COSMOS

The applicant needs to apply for online registration and submit a physical copy of the application along with the necessary documents to the Regional Office of the Reserve Bank of India. The application can be submitted on RBI's official COSMOS website.

Step 3: Click on CLICK option for company registration

In the next step, you need to click on CLICK option on the login page of the COSMOS Application.

Step 4: Download the excel form

An Excel application will show up which you need to download and then upload after filling up all the required details. The company needs to indicate the correct name of the Regional Office in the field “C-8” of the “Annex-I identification Particulars” in the Excel application form.

Step 5: The Company will be allocated a CARN number

Once you have submitted the form, you will receive a Company Application Reference Number for the CoR (Certificate of Recognition) application filed online.

Step 6: Submit the application along with the supporting documents to the regional office

Once you have received CARN, you need to submit the physical application form along with the supporting documents to the regional office. The ROC will scrutinize the form and documents and will then send it to the head office.

Step 7: Issuance of NBFC License

After everything is found to be correct, the Head Office of RBI will, then, issue the NBFC license. The applicant can check the status of the application by keying in the acknowledgment number.

Learn about the documents required and regulatory requirements of NBFC registration.

Why should you opt for fresh NBFC Registration instead of NBFC takeover?

It's always recommended to apply for fresh NBFC license application because RBI has simplified the process of NBFC registration after 2016, while NBFC takeover is little complicated. The process is beneficial especially for foreigner companies who intend to enter into the Indian Financial Service Market.

NBFC compliances after COR

Once you have completed the NBFC registration process, you need to follow certain guidelines by RBI:

  • Obtain membership from all four Credit rating agencies (CIBIL, Equifax, Experian and CRIF Highmark), if you are willing to have credit scoring from API, Please use Equifax.
  • Apply for E-KYC Registration & Regular reporting of the borrowers.
  • FIU Registration.
  • Income tax Returns.
  • ROC Returns.
  • Secretarial compliances.
  • Statutory Audit.
  • Tax Audit.
  • File NBS-9 using Online Platform of RBI (COSMOS).

Final words

NBFC registration is quite an arduous task which is next to impossible to do it on own. There are many compliances and requirements that need to be followed. So, if you’re going to set up your own NBFC and want it to be registered, then contact Enterslice without any second thought. We will not only help you throughout the process but will also get the registration done.