NBFC Registration

NBFC Registration

A Non – Banking Financial Corporation is a company incorporated under the Companies Act 2013 or 1956 which is incorporated for carrying on the business of Loans and Advances, Acquisition of stocks, equities, debt so forth, issued through the government or any local authority. The primary objective of this kind of organization is to accept deposits under any scheme or way.

A Non – Banking Company performing the business of a financial institution would be an NBFC. It is governed through the Ministry of Corporate Affairs and the Reserve Bank of India.

Advantages of NBFC Registration

NBFCs as of late gained up a great deal of fame in the middle of institutional investors, in light of the fact that NBFCs gives semi-rural and rural India the access towards credit, as the traditional banks have been traditionally poor in contacting them. A few advantages are:

  • Provides loans and credit facilities- There are corporations opting to take commerce loan from NBFCs except for Banks because of quicker processing, competitive interest rates, as well as the availability of loans for those with bad credit history.
  • Supporting investment in property- Investing resources in property with NBFCs is profitable because of flexible rates, easy repayment, and acceptable property collaterals with speedy and simple processing
  • Trading money market instruments- Interest rates on money market instruments for example commercial paper id soft withNBFCs, however, the base rate of banks remained unaltered.
  • Funding private education- Flexible rates as well as easy return makes it helpful.
  • Gives retirement planning
  • Recommend corporations in merger and acquisition
  • Wealth management like Managing portfolios of stocks as well as shares
  • Arrange feasibility, market or industry studies for corporations

Document Required for NBFC Registration

The application for NBFC License should be submitted online and offline with the required documents towards the Regional Office of the Reserve Bank of India. The documents that are required to be submitted for NBFC License are:

  • Documents regarding the Information about the management and administration of the corporation.
  • Certified copies of Certificate of Incorporation and Certificate of Commencement of Business in case of public limited corporations.
  • Certified copies of up-to-date Memorandum and Articles of Association of the corporation. Details of clauses in the memorandum relating to financial business.
  • Documents describing the location of the company.
  • Detailed information about Directors or Partners of the Company.
  • Accounts of the company well-audited for last three consecutive years.
  • Board Resolution in favor of NBFC
  • Director’s Profile.
  • Directors CIBIL records.
  • Bank Account with a minimum paid-up equity share capital of INR-2 Crore.
  • Income tax PAN/CIAN, etc.
  • Other relevant documents on request.

Process of Incorporation:

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The process to incorporate an NBFC is:

  1. A corporation must first be registered under the Companies Act 2013 or under Companies Act 1956.
  2. The minimum net owned finances of the corporation must be Rs. 2 Crore. In case of a Foreign Company wanting to set up an NBFCin India, they are required to have a paid-up equity share capital of Rs. 5 Crore.

Note: The Net Owned Fund mentioned above has to be present in the any’s bank account at the time of Filing Application

  1. The CIBIL records of the corporation must be clean.
  2. After all of the above conditions were satisfied the online application on the website of RBI must be filled and submitted along with the required documents.
  3. A Company Application Reference Number shall be generated.
  4. A Hard copy of the application also needs to be sent towards the regional office of the Reserve Bank of India.
  5. After the application is appropriately verified and checked and approval of the submitted documents and application, the regional office will send the application to the Central office of RBI, which then goes through vital examination towards granting the Certificate.
  6. If the terms and conditions as per section 45-I A of the RBI Act, 1934 are fully met, then the License shall be granted to the corporation.

We at Panomics Legal Mentors provide meticulous assistance to the clients correctly filing the NBFC Registration as per the rules.

Legal remedies

If any unincorporated organization (Proprietorship / Partnership) or an NBFC without approval to take deposit is found accepting public deposits, it is then legally responsible for criminal activity. Additionally, if NBFCs partner themselves with proprietorship/partnership corporations accepting deposits in contradiction of RBI Act, they are likewise subject to be prosecuted under criminal law or under the Protection of Interest of Depositors (in Financial Establishments) Act, if passed by the State Governments.