NBFC Registration in Chennai

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According to a popular website, there are 300+ Non-Banking Financial Companies in Chennai as of today. Even with these, the requirement of finance of small-time companies and enterprises has been increasing multifold creating space for more Non-Banking Financial Services Companies or NBFCs in Chennai.

The Non-Banking Financial Companies have an edge over the traditional banks since the banks have a strict formula for deciding the credit-worthiness of any individual, company or entity. NBFCs, on the other hand, have a more liberal approach towards providing loans and even cater to the needs of the small time entities.

Thus, it shall be correct to state that the scope of NBFCs in Chennai is every growing.

What are the requirements for NBFC registration in Chennai?

For an NBFC in Chennai to become operational, it requires to obtain a Certificate of Registration (CoR) from the Reserve Bank of India. For making an application of CoR to the Reserve Bank of India, the entity must comply with following:

  1. It must be a Private Limited or a Public Limited Company registered under The Companies Act, 1956 or Companies Act, 2013.
  2. It must have a minimum net owned fund of Rs. 2 cr.

What are the different categories of NBFCs?

NBFCs are classified in various different manners:

  1. As per the type of liabilities:
    1. Non-Deposit accepting NBFCs and
    2. Deposit accepting NBFCs and
  2. Non-deposit taking NBFCs are further categorized:
    1. systemically important (NBFC-NDSI) and
    2. all other non-deposit holding companies (NBFC-ND)
  3. then the NBFCs are classified as per their primary business:
    1. Loan Company (LC)
    2. Investment Company (IC)
    3. Asset Finance Company (AFC)
    4. Systemically Important Core Investment Company (CIC-ND-SI)
    5. Non-Banking Financial Company-Micro Finance Institution (NBFC-MFI)
    6. Mortgage Guarantee Companies (MGC)
    7. Infrastructure Finance Company (IFC)
    8. Infrastructure Debt Fund Non- Banking Financial Company (IDF-NBFC)
    9. NBFC- Non-Operative Financial Holding Company (NOFHC)
    10. Non-Banking Financial Company– Factors (NBFC-Factors)

The requirements, information to be provided with the application form and documents to be submitted with the hard copy differ as per the type of Non-Banking Financial Company decided to be incorporated.

What is the procedure for application to the Reserve Bank of India for NBFC Registration in Chennai?

  1. Once the eligibility of the entity to apply for CoR is met, an application has to be made on the RBI secured portal. The application is made online and a hard copy is then submitted along with the required documents. The hard copy is to be submitted to the Regional Office of RBI. For Chennai region, the concerned office of RBI is the one with jurisdiction over the State of Tamil Nadu and Union Territory of Puducherry and is situated at Chennai.
  2. The downloaded application form requires information like:
    1. Basic information about the Registered Company
    2. Details of the Capital funds and risk assets
    3. Information about the promoters, chairman, managing director, directors and CEO
    4. SAC certificate etc.
  3. The information provided in the online application form and documents to be submitted with the hard copy is according to the type of NBFC.
  4. The status can be tracked on the site using the acknowledgment number provided.

 What are the documents required to be submitted to the Reserve Bank of India?

Following are few documents which are required to be submitted along with many others. A Consultant is always better to be approached for such a procedure as it ensures no important information or documents is left behind.

  1. Certified copy of Certificate of Incorporation issued by the Registrar of Companies;
  2. Extract of the object clause in the MOA;
  3. Copy of the certificates of Director’s highest educational and professional qualification along with experience certificates;
  4. The Audited balance sheet and Profit & Loss account along with directors & auditors report for the entire period of the company’s existence, or for the last three years, whichever is less;
  5. Bankers report depicting details of deposits and loans balances as on the date of application and the conduct of the account.

Why does one require the assistance of a consultant while making an application of NBFC registration in Chennai?

The procedure of obtaining the CoR from the RBI though looks simple but is more complex than it appears. There are many details that require special attention like a business plan, the documentation of the directors etc. Efforts have to be put in to ensure that the application and the documents that accompany should be such that they pass the high parameters set by the Reserve Bank of India.

Also, one must be able to make an end to end follow up with the RBI for the status of the application.

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