Non-Banking Financial Company (NBFC) Registration in India
Introduction:
A Non-Banking Financial Company (NBFC) is a company that offers financial services like loans, credit, asset financing, and wealth management without having a banking license. NBFCs are governed by the Reserve Bank of India (RBI) under the RBI Act, 1934.
Key Features of an NBFC
- No Demand Deposits: NBFCs cannot accept demand deposits like banks.
- Financial Services: Provide loans, advances, and invest in shares, debentures, and other securities.
- Payment System: Not allowed to participate in payment/settlement systems or issue cheques.
- No Deposit Insurance: NBFC deposits are not insured by DICGC.
Types of NBFCs
- Asset Finance Company (AFC): Finances physical assets used in economic activities (e.g., machinery, vehicles).
- Investment Company (IC): Primarily invests in shares, stocks, and other securities.
- Loan Company (LC): Engages in lending and issuing advances.
- Infrastructure Finance Company (IFC): Focuses on funding infrastructure projects.
- Micro Finance Institution (MFI): Provides small loans to underserved or low-income individuals.
Minimum Requirements for NBFC Registration
- Incorporated Company: Must be registered under the Companies Act, 2013.
- Minimum Net Owned Funds (NOF): ₹2 crores.
- Experienced Directors: At least two directors with financial experience.
- Clean Record: No history of financial misconduct or default.
- Business Plan: Well-documented plan and operational setup.
NBFC Registration Process
- Company Incorporation: Register the company with required capital and documents.
- DSC and DIN: Obtain Digital Signature Certificate and Director Identification Number.
- RBI Application: Apply on RBI’s website with required documents and forms.
- Scrutiny: RBI verifies the application, documents, and business model.
- Certificate of Registration: Issued by RBI upon successful verification, authorizing NBFC operations.
Documents Required
- Certificate of Incorporation (certified copy).
- Business plan detailing the proposed operations.
- MoA and AoA of the company.
- Identity and address proof of all directors.
- Net worth certificate from a Chartered Accountant.
- Audited financial statements (balance sheet and P&L).
Post-Registration Compliance
- Follow RBI Norms: Ongoing compliance with RBI regulations is mandatory.
- Annual Filings: File returns with the RBI and Registrar of Companies (ROC) on time.
- Maintain NOF: Ensure ₹2 crore minimum net owned funds are maintained.
- Reporting: Submit financial statements and required returns to RBI periodically.
Conclusion
NBFC registration offers exciting opportunities for companies entering the financial services sector without becoming a bank. However, strict RBI compliance is essential to avoid penalties and ensure smooth functioning. Get professional assistance to streamline your NBFC registration and documentation process.