In this post, we are covering important considerations for NBFC Registration in India. In the Indian financial system, a non-banking financing institution is emerging very fast as an important element of the financial system in India. With this trend, more and more companies are setting up their business as an NBFC.
Under the companies act 2013, A non-banking financial company or a NBFC is a registered company which is engaged in the business of loans and advances, acquisition of debentures/bonds/stocks/shares/other securities issued by the local authority or government or other marketable securities of same nature, leasing, insurance, chit or hire purchase business and does not include any business whose principal activity is related to sale and purchase of any goods, industrial activity, agriculture activity or offering any other sale/construction/purchase business of immovable property.
In addition to this, a non-banking financial institution is a company that is having a principal business of receiving of the deposits under any arrangement or scheme in installments or in a lump-sum amount by way of significant contributions or any other way. An NBFC is also known as a residuary non-banking company.
Under any scheme or act, it is mandatory for an NBFC Registration in India to get the company registered with the Reserve Bank of India as a deposit-taking entity.
The Procedure for an NBFC Registration in India
1. The operations and working of NBFCs are completely regulated by the RBI under the framework of RBI Act, 1934 (Chapter III B) and all the directions issued by RBI are to be followed. After the registration is complete, the company is ready to conduct its business.
2. Company Registration- The registration process requires the company to fill the form in the prescribed format and submit the necessary documents to the RBI for the RBIs quick consideration. If the bank is satisfied that the documents submitted by the company are authentic, accurate and complete, then it will issue the certificate of registration to the company and the company starts commencing its business.
3. Net owned funds- For the NBFC company registration with RBI, the company should have a minimum net owned fund of Rs.200 lakh in the form of equity from.
4. The opening of a bank account- After the incorporation of the company, all the funds generated should be transferred to a bank account as fixed deposits.
5. Further, after conducting a proper due diligence, RBI will issue a certificate of commencement of business.
