Checklist for Registration of NBFC

Registration of NBFC is most popular post demonetarization and now world startup community has turned towards the fintech financial services.

All about NBFC before You go to Registration of NBFC with RBI

Non-Banking Financial Company (NBFC) is a financial institution, other than the Cooperative and Commercial Banks, which provides a variety of banking and non-banking services to the interested and concerned people, business enterprises, entrepreneurs, etc. It does not hold a banking license but strictly follows the rules and regulations provided by RBI from time to time.  The most common business fields of NBFCs are industrial and commercial loans and advances, deposits, hire-purchasing, leasing, investment funds and chit business, insurance business, instruments of the capital and money markets such as stocks, bonds, and many other similar activities. The functioning of NBFCs is critically regulated and supervised by the RBI strictly in accordance with the provisions and regulations provided in the Chapter III B of the RBI Act of 1934.

NBFCs are the bridges to fill the gap between the investors or depositors and the borrowers. Its main business activity is to raise capital funds from the public depositors and investors and lend these to all categories of borrowers under the rules, regulations, and conditions as prescribed by the Reserve Bank India. NBFCs are rapidly becoming the active and admirable alternative to the banking and financial sector as these are really very supportive and beneficial companies.

NBFCs must be registered as rules and regulations are given in the Section 45-IA of the RBI Act of 1934. The company or firm desirous to be registered as NBFC must be duly registered as per the Companies Act of 2013, or earlier Companies Act of 1956.

Checklist for Registration of NBFC in India

Documents required for registration as Type I – NBFC-ND

Following Documents needs to be submitted to RBI along with the prescribed application form for NBFC registration as Type I – NBFC

• Copies of Certificate of Incorporation (COI) and Certificate of Commencement of Business (in case of public limited companies).
• Copies of extracts of the main object clause in the MOA relating to the financial business.
• Certified true copy of Board resolution stating following information:

1. The company is not carrying on any activity of NBFC or any activity supporting NBFC and will not carry on or commence the same before getting registration certificate from RBI.
2. The company has not accepted any public depositor hold any public deposit as on the date and will not accept the same in future without getting the prior approval of Reserve Bank of India
3. The UIBs in the group where the director has a substantial interest or otherwise has not accepted any public depositor hold any public deposit as on the date and will not accept the same in future
4. The company has formulated “Fair Practices Code” as prescribed by RBI Guidelines.
5. A bankers’ certificate of no lien indicating balances in support of Net Owned Fund and a Copy of Fixed Deposit Receipt.
6. Audited financial statements along with directors & auditors’ report from the date of incorporation of the company, or for last three years, whichever is less, (In case of existing companies).
7. Bankers’ report in respect of the applicant company, its group/subsidiary/associate/holding company/related parties, directors of the applicant company having a substantial interest in other companies  The Banker’s report shall state about the dealings done by these entities with the bankers as a depositing entity or a borrowing entity.

Documents required for NBFC registration as Type II – NBFC-ND

Following Documents need to be submitted to RBI along with the prescribed application form for registration of Type II – NBFC-ND

• Copies of Certificate of Incorporation (COI) and Certificate of Commencement of Business (in case of public limited companies).
• Copies of an extract of the main object clause in the MOA relating to the financial business.
• Certified true copy of Board resolution stating following information:

1. The company is not carrying on any activity of NBFC or any activity supporting NBFC and will not carry on or commence the same before getting registration certificate from RBI.
2. The company has not accepted any public depositor hold any public deposit as on the date and will not accept the same in future without getting the prior approval of Reserve Bank of India
3. The UIBs in the group where the director has a substantial interest or otherwise has not accepted any public depositor hold any public deposit as on the date and will not accept the same in future
4. The company has formulated “Fair Practices Code” as prescribed by RBI Guidelines.
5. A bankers’ certificate of no lien indicating balances in support of Net Owned Fund and a Copy of Fixed Deposit Receipt.
6. Audited financial statements along with directors & auditors’ report from the date of incorporation of the company, or for last three years, whichever is less, (In case of existing companies).
7. Certified copies of educational and professional qualification of all directors and experience certificate in the sector of Financial Services if any.
8. Bankers’ report in respect of applicant company, its group/subsidiary/associate/holding company/related parties, directors of the applicant company having a substantial interest in other companies  The Banker’s report shall state about the dealings done by these entities with the bankers as a depositing entity or a borrowing entity.

Documents required for NBFC registration as NBFC-MFI

Following Documents need to be submitted to RBI along with the prescribed application form for registration of NBFC-MFI

• Copies of Certificate of Incorporation (COI) and Certificate of Commencement of Business (in case of public limited companies).
• Copies of the extract of the main object clause in the MOA relating to the financial business.
• Certified true copy of Board resolution stating following information:

1. The company is not carrying on any activity of NBFC or any activity supporting NBFC and will not carry on or commence the same before getting registration certificate from RBI.
2. The company has not accepted any public depositor hold any public deposit as on the date and will not accept the same in future without getting the prior approval of Reserve Bank of India.
3. The UIBs in the group where the director has a substantial interest or otherwise has not accepted any public depositor hold any public deposit as on the date and will not accept the same in future
4. The company has formulated “Fair Practices Code” as prescribed by RBI Guidelines.
5. The company will become a member of all the Credit Information Companies and will also be a member of at least yourself-RegulatoryOrganization.
6. The company will comply with the regulations prescribed in the RBI Guidelines regarding pricing of credit, Fair Practices in lending and non-coercive method of recovery.
7. The company has fixed internal exposure limits to avoid any undesirable concentration in specific geographical locations
8. The company is not registered under section 8 of Companies Act. 2013 or Companies Act, 1956
9. A bankers’ certificate of no lien indicating balances in support of Net Owned Fund and a Copy of Fixed Deposit Receipt.
10. Audited financial statements along with directors & auditors report from the date of incorporation of the company, or for last three years, whichever is less, (In case of existing companies).
11. Certified copies of educational and professional qualification of all directors and experience certificate in the sector of Financial Services if any.
12. Bankers’ report in respect of applicant company, its group/subsidiary/associate/holding company/related parties, directors of the applicant company having a substantial interest in other companies  The Banker’s report shall state about the dealings done by these entities with the bankers as a depositing entity or a borrowing entity.
13. Roadmap for achieving 85% qualifying assets.

Documents required for registration as NBFC-Factor Applicant

Following Documents need to be submitted to RBI along with the prescribed application form for registration of NBFC-Factor applicant

• Copies of Certificate of Incorporation (COI) and Certificate of Commencement of Business (in case of public limited companies).
• Copies of an extract of the main object clause in the MOA relating to the financial business.
• Certified true copy of Board resolution stating following information:

1. The company is not carrying on any activity of NBFC or any activity supporting NBFC and will not carry on or commence the same before getting registration certificate from RBI.
2. The company has not accepted any public depositor hold any public deposit as on the date and will not accept the same in future without getting the prior approval of Reserve Bank of India
3. The UIBs in the group where the director has a substantial interest or otherwise has not accepted any public depositor hold any public deposit as on the date and will not accept the same in future
4. The company has formulated “Fair Practices Code” as prescribed by RBI Guidelines.
5. The company will have financial assets in the factoring business constituting at least 50% of its total assets and its income derived from factoring business will not be less than 50% of its gross income in the coming future (as the time period prescribed by RBI Guidelines).
6. A bankers’ certificate of no lien indicating balances in support of Net Owned Fund and a Copy of Fixed Deposit Receipt.
7. Audited financial statements along with directors & auditors report from the date of incorporation of the company, or for last three years, whichever is less, (In case of existing companies).
8. Certified copies of educational and professional qualification of all directors and experience certificate in the sector of Financial Services if any.
9. Bankers’ report in respect of applicant company, its group/ subsidiary/ associate/ holding company/ related parties, directors of the applicant company having a substantial interest in other companies. The Banker’s report shall state about the dealings done by these entities with the bankers as a depositing entity or a borrowing entity.

Documents required for registration as NBFC-IDF

Following Documents need to be submitted to RBI along with the prescribed application form for registration of NBFC-IDF.

1. Copies of Certificate of Incorporation (COI) and Certificate of Commencement of Business (in case of public limited companies).
2. Copies of an extract of the main object clause in the MOA relating to the financial business.
3. Certified true copy of Board resolution stating following information:
4. The company is not carrying on any activity of NBFC or any activity supporting NBFC and will not carry on or commence the same before getting registration certificate from RBI.
5. The company has not accepted any public depositor hold any public deposit as on the date and will not accept the same in future without getting the prior approval of Reserve Bank of India
6. The UIBs in the group where the director has a substantial interest or otherwise has not accepted any public depositor hold any public deposit as on the date and will not accept the same in future
7. The company has formulated “Fair Practices Code” as prescribed by RBI Guidelines.
8. A bankers’ certificate of no lien indicating balances in support of Net Owned Fund and a Copy of Fixed Deposit Receipt.
9. Audited financial statements along with directors & auditors report from the date of incorporation of the company, or for last three years, whichever is less, (In case of existing companies).
10. Certified copies of educational and professional qualification of all directors and experience certificate in the sector of Financial Services if any.
11. Bankers’ report in respect of applicant company, its group/subsidiary/associate/holding company/related parties, directors of the applicant company having a substantial interest in other companies  The Banker’s report shall state about the dealings done by these entities with the bankers as a depositing entity or a borrowing entity.
12. No Objection Certificate issued by RBI to NBFC-IFC for sponsoring the NBFC-IDF
13. Copy of Tripartite Agreement between NBFC-IDF, the Project Authority, and the concessionaire.
14. Details of change in the management of the sponsor company during last financial year till date, if any, and reasons thereof
15. Source of startup capital of the company with documentary evidence. NBFC-IDF would raise resources through issue of either Rupee or Dollar denominated Bonds of a minimum 5-year maturity