nbfc-company-registration

THINGS TO KNOW BEFORE YOU REGISTER-NBFC COMPANY REGISTRATION

Non-banking financial companies (NBFCs) are financial institutions that is same like a Banking Company but some works arev restricted like honouring of Cheques, acceptance of demands deposits etc.

A Non-Banking Financial Company (NBFC) is a company incorporated under the Companies Act which is engaged in the business of acceptance or providing of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities , leasing, hire-purchase, insurance business, chit business. An NBFC can not form with the object of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property. A non-banking institution which is a company and has principal business of receiving deposits under any scheme or arrangement in one lump sum or in installments by way of contributions or in any other manner, is also a non-banking financial company

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Non- Banking financial companies(NBFCs) are financial institutions that offer financial services and registered under the Companies Act. A NBFC is a company engaged in the business of loans and advances, acquisition of securities issued by government or local authority, leasing, hire-purchase, insurance business,chit business but does not include any institution whose principal business is that of purchase and sale of goods ( other than securities), industrial activity, agriculture activity or providing any services of purchase, sale or construction of immovable property.

Quick Processing

NBFC have a less stringent set of requirement. Most NBFC require minimal documentation. So all you need to apply for a loan, is simply check your eligibility for desired loan and submit all the necessary documents.
Less Rules and Regulations for lending loans

This helps borrowers get loans easily.
Compared to banks,

the NBFCs are unknown to have less stringent rules and requirements for loan eligibility. Banks always have very strict obligations,In case the applicant does not match up to the bank’s eligibility criteria, the loan application gets rejected. At NBFCs, there is usually only minimal documentation involved, and on successful submission of documents the loan is processed quickly.

List Of Documents Required For NBFC Company Registration

Certificate of Incorporation and Certificate of Commencement of Business in case of public limited companies.
extract of only the main object clause in the MOA relating to the financial business.
Board resolution stating that:

a) the company is not carrying on any NBFC activity/stopped NBFC activity and will not carry on/commence the same before getting registration from RBI
b) the UIBs in the group where the director holds substantial interest or otherwise has not accepted any public deposit in the past /does not hold any public deposit as on the date and will not accept the same in future
c) “Fair Practices Code” has been formulated as per RBI Guidelines
d) the company has not accepted public funds in the past/does not hold any public fund as on the date and will not accept the same in the future without the approval of Reserve Bank of India
e) the company does not have any customer interface as on date and will not have any customer interface in the future without the approval of Reserve Bank of India
The Audited balance sheet and Profit & Loss account along with directors & auditors report or for the entire period the company is in existence, or for last three years , whichever is less, should be submitted in case of companies which are already in existence.
Copy of the certificate of highest educational and professional qualification of all the directors
Copy of experience certificate in the Financial Services Sector (including Banking Sector) in respect of all the directors(IF ANY).

Procedure Of NBFC Company

FAQ

Most Frequent Questions And Answers

HOW ARE NBFCS DIFFERENT FROM BANKS?

In terms of lending and making investments, the Non-Banking Financial Companies are similar to banks. However, there are some differences between them which are hereunder:
a. NBFCs cannot accept demand deposits
b. NBFCs cannot issue cheques to its customers as they do not form a part of the payment and settlement system c. NBFCs cannot avail the deposit insurance facility of DICGC.
d. They cannot issue demand drafts

DO NBFCS NEED TO BE REGISTERED WITH RBI?

Section 45-1A of the RBI Act, 1934, makes it mandatory for all NBFCs to be registered with the Reserve Bank of India for the purpose of commencing any business or carrying on the businesses defined in clause (a) of Section 45-1 of the Act of 1934. However, this comes with an exception.

Some categories of NBFCs like Venture Capital fund, Chit funds, Housing Finance etc are regulated by regulators like SEBI, State Governments, National Housing Banks etc. To eliminate the possibility of dual regulation, these categories of NBFCs are spared from the requirement of registering with RBI.

WHAT ARE THE DIFFERENT CATEGORIES OF NBFCS?

Infrastructure Finance Company (IFC)
IFCs are companies in which infrastructure loans constitute at least 75% of the gross assets, they have at least 300 crore INR worth of net fund and have a CRAR of 75%.

Systemically Important Core Investment Company (CIC-ND-SI)
These are companies which are only engaged with investment activities. Evidently, investment in securities of companies constitutes 90% of their gross assets which are over 100 crore INR. Investments in equity shares of such companies should form at least 60% of its total assets

Non-Banking Financial Company-Factors (NBFC-Factors)
These companies are engaged in the business of factoring. It is required that they obtain at least 50% of its gross assets through factoring and factoring should constitute more than 50% of its total income.

Mortgage Guarantee Company (MGC)
These are companies possessing a net fund of ₹100 crore and obtaining at least 90% of its gross income from mortgage guarantee.

WHAT ARE THE REQUIREMENTS TO REGISTER WITH RBI?

Requirements
It should be registered under Section 3 of the Companies Act
They should possess a minimum net owned fund of ₹ 200 lakh
The company is required to submit its application for registration in the prescribed format along with necessary documents for bank’s consideration.

HOW DO NBFCS WORK?

The role of NBFCs in the Indian Economy. … NBFC focuses on business related to loans and advances, acquisition of shares, stock, bonds, debentures, securities issued by government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business.

IS LIC A NBFC?

Yes, LICI ( LIC of India, in case you are confused) is an NBFC. … Bank is mainly deals with matter relating to deposit and lending while LIC provides a life insurance cover to the beneficiary.