Assets Finance Company Registration

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What is Assets Finance Company Registration?

In India, Assets Finance Company Registration  is a company which finances the physical assets like automobiles, cars etc. Without prior registration with the Reserve Bank of India no company can carry business of asset finance. In case of no registration, the Reserve Bank of India can impose penalty or fine or can even prosecute them in a court of law. It is also known as vehicle finance company.

According to Reserve Bank of India, an Asset Finance Company is a financial institution whose principal business is the financing of physical assets supporting productive or economic activity such as automobiles, tractors, machines, generator sets, earth moving and material handling equipment and general purpose industrial machines.

Principal business for this purpose is defined as physical assets supporting economic activity and where income is not less than 60% of its total assets and total income respectively. 

Procedure for Asset Finance Company Registration

In India, the procedure of registering an Assets Finance Company Registration is a little complex. The whole process of registering an AFC take months to complete as it involves permission of Reserve Bank of India.

Here is a procedure of registration in brief:

  • Company Registration

The first step is to register a company in India. It can be public or private, it depends upon the choice of promoters. Initially, company may be registered with any amount of capital.

  • Raise Authorized and Paid up Share Capital to two crores

After this, the next step is to raise the authorized share capital as well as paid up share capital up to two crores rupees. This could be done in the first step itself but it involves risk of rejection so it is recommended to do it after incorporation.

  • Deposit Amount of Rupees Two Crore in Fixed Deposit and Obtain Certificate

The next step is to deposit the sum of Rs.2 crore in fixed deposit and obtain a certificate of no lien from the bank.

  • Get all the Certified Copies and Complete the Checklist for RBI Registration

After this, the next step is to complete the requirements for the RBI registration. Here are the following requirements for Assets Finance Company Registration

  1. Certified Copy of Certificate of Registration
  2. Certified copy of an extract of the main object clause in the MOA relating to the financial business.
  3. Certified Copy of the Board resolution
  4. A copy of Fixed deposit receipt & bankers certificate of lien indicating balances in support of Net Owned Funds.
  5. Bankers Report for Applicant Company/ group companies.
  • Fill online application

After this, an online application shall be filed for NBFC registration as an Asset Finance Company (AFC). Once the online application is filed, the company gets a Company Application Reference Number.

  • Submit the Hard Copy to the Regional Office of Reserve Bank of India (RBI) office

The next step after the online application is filed, is to submit the hard copy along with all the necessary documents to the regional office of a Reserve Bank of India.

Required Documents

For the purpose of registering NBFC as a private limited company, there is a requirement of at least two persons to start with.

Here are the following documents required for the AFC registration:

  • Copy of PAN
  • Identity Proof (Driving License, Passport, Aadhar Card, Voter ID)
  • Address Proof (Bank Statement, electricity bill, Mobile Bill, Telephone Bill)
  • Passport Size photograph
  • Rent agreement/ownership document
  • Electricity bill
  • A copy of No Objection Certificate (NOC) from the owner.
  • CIBIL records of all shareholder (more than 10% share in Company) and directors
  • Education & Experience proof of promotors
  • Fixed deposit of Rs. 2 Cr for the Purpose of NOF requirement
  • Net worth certificate of directors and shareholders