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NBFC Registration in India

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Procedure for Applying


 

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Basics of NBFC Registration


Non-Banking Financial Company or NBFC is mostly involved in the principal business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority along with various marketable securities like leasing, hire-purchase, insurance business and chit business.

However, it doesn’t include any institution with the principal business of agriculture or industrial activity, purchase or sale of any goods or providing any services along with the sale/purchase/construction of immovable property.
NBFC is a company that is registered under the Companies Act, 1956 or Companies Act, 2013 and NBFC in India can be categorised into 2 sections:

  1. Deposit accepting Non-Banking Financial Companies known as NBFC-D

  2. Non-Deposit accepting Non-Banking Financial Companies known as NBFC-ND


Now, since the NBFC Registration is the first and foremost step to start a finance company in India, you must know the types of NBFC registrations available here.
10 types of NBFC’s in India:-

  1. Asset Finance Company (AFC)

  2. Loan Company (LC)

  3. Infrastructure Finance Company (IFC)

  4. Investment Company (IC)

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

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

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

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

  9. Mortgage Guarantee Companies (MGC)

  10. Non-Operative Financial Holding Company (NOFHC)

Required Documents for NBFC Registration in India


Before NBFC registration, you’ll have to submit some relevant documents. These documents are submitted to RBI along with the physical application copy of your NBFC registration.

Documents

  • Incorporation certificate along with detailed information about the management of the company
  • PAN/CIN of the company
  • Address proof
  • Copy of Board resolution stating that the company is not carrying out any NBFC activity and will continue to not do so until the registration is granted by RBI.
  • Copy of Board resolution on ‘Fair Practices Code
  • Self-attested copy of Bank Statement and Income Tax Returns
  • Certified MoA (Memorandum of Association) and AoA (Articles of Association)
  • Self-attested profile of all the directors
  • CIBIL or Credit reports of the directors
  • Bank details including accounts, balances, loans, credits, etc.
  • Audited balance sheet and profit and loss statement along with auditors and directors report of the preceding 3 years
  • Information of the company’s future plans for the next 3 years with balance sheet projection, cash flow and income statement.

NBFC Registration in India: Procedure


According to Section 45, I (a) of the RBI Act, 1934, a company that is already incorporated and has a minimum net owned funds of Rs. 2 crores can only register itself in India. So, with the basics out of the way, let’s look at the steps.

  • First, you need the company incorporation certificate which is registered under either Companies Act, 2013 or the Companies Act, 1956 and it must be a Private or Public Limited Company.
  • Then, you must apply for online registration on RBI’s official COSMOS website.
  • On the COSMOS website, you’ll find an Excel application form that you have to download, fill up with required information and upload again on the website.
  • Once you have completed the submission, you’ll receive a Company Application Reference Number (CARN) for the CoR (Certificate of Recognition) application filed online.
  • After that, you’ll have to submit a physical copy of the application along with all the necessary documents to your Regional Office of the Reserve Bank of India.
  • ROC will verify the application and submitted documents. If everything’s okay, the Head Office of RBI will issue the NBFC license.

Feels Too Complicated?


NBFC registration can be a hefty task. There are lots of things to be considered, rules to be followed and compliances to be filed. Here, at StartEazy, we understand how important your time is and our only goal is to make things EAZY for you!

We will take care of the entire registration process and help you obtain your NBFC licence while you can focus more on what you do best, run the business! Let us worry about the legal part. Get in touch with StartEazy today!

Compliance Filing after Registration


Once the registration procedure is completed, you’ll have to follow some guidelines placed by RBI, such as:

  • You’ll have to obtain membership from all the Credit rating agencies: CIBIL, Equifax, Experian and CRIF High-mark

  • Application for E-KYC

  • ROC Returns

  • FIU Registration

  • Income Tax Returns

  • Tax Audit

  • Statutory Audit

  • Secretarial compliances

  • File NBS-9 using COSMOS

Prerequisite For Registration


Directors

  • Experience: at least 1/3rd directors of the company must have the experience in finance field to be able to apply for NBFC license
  • Credit history: the credit score of the company and the directors of the company must be good and they must not have defaulted in the previous loan repayments.

Company

  • Company registration: the company registration is required for getting started with NBFC registration. Our Experts will assist you with this
  • Five year business plan: the applicant company must draft the detailed business plan that must be for next five years
  • Minimum of NOF requirements: the applicant must have minimum net owned funds that must be of Rs. 2 cr.
  • Qualify the capital test: RBI undertakes various capital test which help them to check the invested capital that must be free and compliance with the laws
  • FEMA compliance: the company must involve in the foreign investment, here the applicant must comply with FEMA act.

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