Loan Company Registration

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What is loan company registration?

Loan company is a type of Non-Banking, Financial Company. As the names suggest, Loan company is a financial institution carrying on the business principle of providing finance by way of loan or advance for supporting the activities other than its own. It provides aid to loans and financial assistance related needs in a transparent and speedy manner. Loan company is registered as a Non-Banking, Financial Company under Companies Act, 2013. Loan company raises funds from the public, and lend them to ultimate spenders. These companies advance loans to the small-scale industries, various wholesale and retail traders and others who need financial assistance. Loan companies are being recognized as complementary to banks due to their attractive rates of return on deposits, simplified procedure and meeting the credit need timely.

Registration Process of Loan company -NBFC 

A loan company is a Non-Banking Financial company which is registered under the Companies Act, 2013 with an Authorized Capital of 200 Lakh. It can be registered either as a Private Limited Company or as a Public Limited Company.

As per the RBI Act, a non-banking financial company is defined as: –

a financial institution which is a company; ·

A non-banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner;

such other non-banking institution or class of such institutions, as the bank may, with the previous approval of the Central Government and by notification in the Official Gazette

Procedure for Loan company registration  

  • The applicant company needs to be registered under the Companies Act, 2013 with a minimum paid up capital of Rs. 2 crores.
  • If a foreign company wants to register itself as NBFC in India its minimum capital shall be Rs. 5 crores.
  • Once the company is registered as Private Limited or Public Limited Company it needs to open a Fixed Deposit of Rs. 2 Crores.
  • After company registration and the Fixed Deposit process is over, you can move ahead to file the application in prescribed format with all necessary documents to Reserve Bank of India.
  • If the Reserve Bank of India is satisfied that the documents are complete and are as per the requirement of Section 45-IA of the RBI Act of 1934, it may grant the license to the company to work as a Non-Banking Financial Company and grant Certificate of NBFC registration.
  • After getting the Certificate from the Reserve Bank of India, Loan Company can start providing loans to the public.