NBFC Registrationcontact Us
What is a NBFC?NBFC stands for non-bank financial company. These are companies that are not banks and provide a wide range of services, such as commercial lending, credit cards, or mortgage services. NBFCs make up an important part of the financial system in most countries around the world – with some economies relying more on this type of company than others. NBFCs were originally developed to provide services that have historically been unavailable from banks, but they have since grown to include many types of financial products and services. Several important financial innovations have been developed to cater to the needs of the non-bank financial firms, including the first generation of securitisation and many other innovations in securities. The NBFCs industry is highly competitive due to its low barriers for entry compared with traditional banking, and the large numbers of customers who use their services. There is also a rapid increase in new players into this industry as many people see it as an attractive investment opportunity. The growth rate for this sector is expected to be over 11% between 2012 and 2017, which has resulted in a significant increase in competition among NBFCs, also known as shadow banking. Competition among these companies is driven by significantly lower barriers to entry, with thousands of players in the industry competing to be able to offer the best services. They are different from the Cooperative and Commercial Banks, They do not need to hold a banking license but must strictly follow the rules and regulations provided by RBI from time to time./p>
How NBFCs are Different from BankBecause both NBFC and Banks are both involved in financial activities but some features are different in them. Some of them are:
- Acceptance of Deposits
- Cheques drawn on itself.
- Being a part of the payment and settlement system.
- Facility of insuring Deposit’s, available with Deposit Insurance and Credit Guarantee Corporation. Applicable only to bank deposits.
Pre-Conditions of NBFC RegistrationAccording to Section 45-IA of RBI, below conditions must be fulfilled for a company to be registered as an NBFC:
- The financial institution should be established as a company under Section 3 of the Companies Act 2013 or the previous Companies Act 1956.
- At least 1/3rd of the Directors must hold a minimum 10-year experience in finance. And he/she must be employed as a full-time Director.
- A business plan must be detailed and ready for operations for the next 5-years.
- The CIBIL score of the “company, it’s Directors, and it’s members” must be good. They must not have any write-offs or default on the repayment of loans to an NBFC/Bank.
- If any foreign investment is anticipated, the company should be in compliance.
Compliances for NBFCs by RBI
- Adoption of Fair Practice Code,
- CIC Registration,
- C-KYC Registration,
- CERSAI Registration,
- FIU-IND Registration,
- COSMOS Registration,
- Secretarial compliances,
- Compliance of KYC Anti-money Laundering,
- Filing NBS-9 on COSMOS, the online platform of RBI.
Frequently Asked Questions
What is an NBFC?
An NBFC or a Non-Banking Financial Company, is established under the Companies Act in India. It is involved in the business of providing loans and advances to the public. An NBFC company may acquire shares, stocks, bonds, debentures, and other securities from the government or the local authorities. It can be engaged in hire-purchase, leasing, insurance business, chit fund business. But it should not be involved in agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services or sale/purchase/construction of immovable property. An NBFC Company accepts deposits, in lump sum or installments, in different plans/schemes/arrangement.
What is required to get NBFC License from RBI?
Any business willing to commence activities which are of a non-banking financial nature as defined under Section 45-IA of the RBI Act, 1934 should comply with: i. It should be a company incorporated u/s 3 of the Companies Act, 1956 or 2013, ii. It should have a minimum NOF of Rs. 2 crore. (The minimum NOF requirement for specialized NBFCs like NBFC-MFIs, NBFC- Factors, and CICs differs).
What is the difference between NBFCs & banks?
NBFCs provide loans and make investments. This characteristic is the same as that of banks. However, there are some differences: 1. NBFCs cannot accept deposits payable on demand, 2. They are not part of the payment and settlement system and cannot issue cheques drawn on itself, 3. The deposit insurance facility of the “Deposit Insurance and Credit Guarantee Corporation” is not available to the investors of NBFCs.
How to get NBFC License?
Just call LegalRaasta at +91 875 000 8585. We’ll complete the process of accumulating the documents as required by RBI. And Advise you on the procedures to be met and arrange for them to get completed. Then file all the necessary documents with the RBI regional office. Provide consultancy on the steps to be taken by you. Answer all the queries on time. And get the registration process done conveniently.
What documents are required to get registered as an NBFC?
• Certificate of Incorporation of the Company. • MoA and AoA. • Administrative Documents of the Company. • Address proof of the Company. • Detailed information about Directors or Partners of the Company. • Well-audited accounts of the Company since its formations or for at least the past 3-consecutive years. • Board Resolution approving the creation of NBFC. • Bank Account that holds the paid-up equity share capital of minimum Rs. 2 Crore. • Latest KYC. • Net worth certificate. • Clean banker’s report. • Other relevant documents on request.
Does RBI regulate all financial companies?
No. Merchant Banking Companies, Stock Exchanges, Housing Finance Companies, Venture Capital Fund Companies, Stock-broking/Sub-broking Companies, Nidhi Companies, Insurance Companies, and Chit Fund Companies are NBFCs and they do not need to be registered with RBI but they are subject to certain conditions. They are regulated by other regulators.