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