NBFC Registration Process
Once we obtain the DIN and DSC of the directors, two proposed names of the company in preferential order will be submitted to MCA (Ministry of Corporate Affairs) for approval. The name of the company must reflect the character of an NBFC.
After obtaining the name approval, the prescribed e-form SPICe 32 has been submitted along with the AOA, MOA and subscription statement for incorporating the company.
Bank Account Opening
After incorporation of the company, a bank account will open. The entire sum of Rs. 2 crore shall be deposited as a fixed deposit which is free from all liens. The Reserve Bank of India will verify the deposits held by the company with bankers at the time of considering the application for NBFC license.
For obtaining the NBFC status an online application will be filed in the form "COSMOS" to the RBI (Reserve Bank of India). Also, the hard copy of the application indicating the online application reference number along with the documents will be submitted to the RBI regional office. Once all the documents are duly verified and approved by the authority, the license will be granted.
Types of NBFC in India
Investment NBFC company is used to hold and manage securities for investment purposes
Loan type of NBFC's principal business is providing finance by making loans
Infrastructure finance NBFC only works in sector that are energy, transport, water and commercial
Infrastructure Debt Fund type of NBFC is for infrastructure companies where they create space for commercial banks
Microfinance NBFC's offer small loans to individuals or self help groups with capital less than 50,000
Documents Required for NBFC Registration
Following documents are needed to get RBI license for NBFC in India
Latest passport size photograph is required
Scanned copy of all directors Aadhar card/ Voter ID/ Passport/ Driving License
PAN Card copy of all directors
Registered Address Proof
Latest utility bill(water/electricity/gas). NOC from the owner, Notarized rent agreement in case of rented property
Certified copy of company incorporation certificate
Copy of Board resolution stating that the company not carrying any NBFC activity before getting RBI approval
An auditor's report about the receipt of minimum net owned fund
A copy of bankers certificate and fixed deposit receipt indicating balance in support of Net Owned Fund
A copy of highest educational certificate of all directors
Audited Balance Sheet, Profit & Loss Account, Directors & Auditors report for last three years (For company already in existence)
What do you get
Get everything to RBI NBFC License and Begining Financial Activities
Digital signature for directors to digitally sign the documents
Defines the objectives of the NBFC
Defines the rules of the NBFC
PAN number of the company
Two rubber stamps, one with the name of company and one with the name of director
Certificate of incorporation bearing company's registration number and details
NBFC license number to operate the financial activities
Questions? Call us on 011-408-44560
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Frequently Asked Questions
What is the meaning of NBFC?
NBFCs (Non-Banking Financial Companies) are the financial institutions that offers certain types of banking and other lending services. These companies are registered under the Companies Act which involved in the business of lending, investment in shares or bonds or debentures or stocks,. leasing, chit business, hire purchase, insurance business etc.
What are the types of NBFCs in India?
The NBFCs operating in India are divided into following broad categories:
- Asset Finance Company
- Investment Company
- Loan Company
- Infrastructure Finance Company
- Core Investment Company
- Infrastructure Debt Fund
- Micro Finance Company
- Mortgage Guarantee Company
- Housing Finance Company
- Non-operative Financial Holding Company
What are the necessary requirements to obtain the NBFC license?
Any company registered under the Companies Act, 1956 or Companies Act, 2013 and want to commence the business of non banking financial institution should comply with the following requirements:
- The company should be registered under the Companies Act
- It should have a minimum net owned fund of Rs. 2 crore
How to calculate the Net Owned Fund (NOF) as per RBI guidelines?
The minimum net owned fund of Rs. 200 lakhs is one of the requirement to obtain the RBI license for working as a non-banking financial company. There is a specific method given by the RBI for calculation of the net owned fund for NBFCs.
The NOF (Net Owned Fund) is calculated on the basis of last audited balance sheet of the company.
|Calculation of Net Owned Funds|
|Paid up Capital||xxx|
|(+) Free Reserves||xxx|
|(+) Capital Reserves||xxx|
|(+) Balance in share premium||xxx|
|TOTAL OWNED FUNDS||xxxx|
|(-) Revaluation Reserves||xxx|
|(-) Accumulated Loss Balance||xxx|
|(-) Intangible Assets Book Value||xxx|
|NET OWNED FUNDS||xxxx|
What will be the consequences for taking the deposits without the authorisation?
If any private or public limited company take the deposits from public without authorisation, it is counted as a criminal offence. Also, if any unregistered business entity accept the public deposits even with NBFC association contravene the RBI guidelines. Consequently, they are also liable to be prosecuted under the criminal law.
What are the advantages of an NBFC?
- Provide loans and credit facilities
- Trading money market instruments
- Funding private education
- Wealth management
- Supporting investments in property
- Advise company in merger and acquisition
Is it compulsory to register every NBFC with RBI?
Every NBFC governed by the Reserve Bank of India (RBI) under the framework of RBI Act, 1934. Therefore, all the NBFCs to commence the business are required to obtain a license from RBI.
Which companies are exempted from the NBFC registration requirements?
There are few companies that are involved in the financial activity but not require NBFC license because they are regulated by the other financial sector regulators.
|Type of Entity||Regulatory Authority|
|Chit Fund Companies||Respective state government|
|Mutual Funds||SEBI (Securities and Exchange Board of India)|
|Insurance Companies||IRDA (Insurance Regulatory and Development Authority of India)|
|Nidhi Companies||MCA (Ministry of Corporate Affairs)|
|Venture Capital Companies||SEBI|
|Merchant Banking Companies||SEBI|
|Housing Finance Companies||National Housing Bank|
How NBFCs in India are different from banks?
Banks and NBFCs both are the financial intermediaries whose principal business are almost similar. However, there are a few differences as given below:
|Act||Incorporated under the companies act, 1956 or 2013||Incorporated under banking regulation act, 1949|
|Meaning||A financial institution that offers banking services without holding a bank license.||A financial intermediary which incorporated with a aim to provide the banking services to general public.|
|Reserve Ratio||There is no requirement to maintain the reserve ratio.||All the scheduled banks are required to maintain the reserve ratio with RBI.|
|Demand Deposits||NBFCs cannot accept demand deposits.||However, banks can accept the demand deposits.|
|Fixed Deposits||Fixed deposits rated by the rating agencies.||Fixed deposits of banks are not rated by the rating agencies.|
Can NBFCs accept public deposits?
Only those NBFCs are allowed to accept the pubic deposits which have been granted a license depicting the eligibility to accept the deposits from public. But such deposits should not be the demand deposits.
Is there any limit for accepting the public deposits?
Those NBFCs which have been issued a license from RBI to accept the public deposits are allowed to accept the public deposits. But there have been certain limits imposed on the acceptance of the deposits to ensure not to misuse the NBFC license. The limits for the public deposits are vary on the basis of the following factors:
- What is the net owned fund of the company?
- Which type of NBFC is a company? Is it a loan/investment company or asset finance company?
- What are the prudential norms prescribed by the RBI?
- What is the credit rating?
What are the types of NBFCs based on liabilities?
Two types of NBFCs based on liabilities:
- NBFCs- D: Deposit accepting NBFCs
- NBFCs-ND: Non-Deposit NBFCs
What are the mandatory NBFC compliances?
Compliance for Deposit taking NBFCs
- NBS-1: Quarterly returns on deposit in the first schedule
- NBS-2: Quarterly return on prudential norms
- NBS-3: Quarterly return on liquid assets
- NBS-4: The annual return of critical parameters by a rejected company holding public deposits
- NBS-6: Monthly return on exposure to capital market by deposit-taking NBFC with the total assets of Rs. 100 crore or more
- ALM Return: Half yearly return for audited balance sheet and auditor's report by NBFC accepting public deposits
- Branch info return
Compliance for Non-Deposit NBFCs
- NBS-7: A quarterly statement of capital funds, risk-weighted assets, risk assets ratio etc
- NBS-2: Monthly return on important financial parameters of NBFCs-ND-SI
- ALM-1: statement of short-term dynamic liquidity (Monthly)
- ALM-2: Statement of structural liquidity (Half Yearly)
- ALM-3: Statement of interest rate sensitivity (Half Yearly)
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