NBFC Requirements
Non Banking Financial Companies (NBFCs) has managed
to attract a large stake of the business market in context with market encompassing the
entities engaged in banking and banking-related services. It is nowadays recognized as
an important segment of Indian economy. NBFCs are engaged in the business similar to a
bank, but to a limited extent, it does not cover all the activities which a bank does.
An NBFC offers loans, accepting deposits, giving cash advances, leasing, hiring
purchase, performing financial inter-mediation etc.
India is a densely populated country hence need for money is always for survival or such
other requirement is always there. Although banks are established all over India still
it lacks banking institutions in many areas which has resulted in increasing demand for
availing loans from NBFC and more NBFC Registration. More and more people willing to
indulge in the business of NBFC in order to have a profitable business in India than
ever before.
NBFC can raise funds from the public, directly or indirectly, and can freely lend them to
ultimate spenders.
What is the Tenure to Accept Deposits from the Public?
- Minimum: 12 months (1 year), and
- The maximum period consists of 60 months (5 years).
NBFC advance loans to the various small, wholesale, and retail traders as well as
self-employed persons. NBFC advances loan at an interest which is decided by the NBFC
itself, at the same time it is also known for attractive interest rates on the
investors’ deposits.
NBFC has advantages in terms of short-term lending, High ROI, and No Cap on Interests.
What are the areas wherein NBFC Financial Activity cannot Enter?
The NBFC financial activity will not include:
- Agriculture activity,
- Purchase or sale of any goods (other than securities)
- Providing any services and sale/purchase/construction of immovable property or
- Industrial activity.
NBFC Requirements List
Once the type of NBFC to be registered is decided then follow the given below steps, also
note that the basic requirement for NBFC registration is that you should have minimum Net Owned Funds should be of ₹ Two crores to be registered as NBFC:
- To file an application go to the site https://cosmos.rbi.org.in.
- Download the NBFC form from the site fill in the application,
- Thereafter submit the application and
- Take a print of the same and note down the CRN. This SRN can be used to track the
status of the application. - Submit the hard copy of the application form (indicating the online Company
Application Reference Number, along with the supporting documents, to the Regional
Office of the state where you are applying for registration usually at the place
where ROC /head office has been established.
Note: The documents to be attached are enlisted along with the form, which can be
accessed at the time of downloading the form.
Board resolution to be attached along with the application for NBFC Registration shall
be passed keeping in mind the following details:
In case of NBFC-MFI Applicant:
- The certified copy of the board resolution to be attached shall state that:
- The company shall obtain the membership of all the Credit Information Companies and
will
be a member of at least one Self-Regulatory Organization. - The company shall not violate any of the rules and regulations of Fair Practices in
lending, pricing of credit, and non-coercive method of recovery as per the
guidelines of
RBI. - It shall also detail about the steps taken to avoid any undesirable concentration in
any
geographical locations - The company does not fall under Section 25 of the Companies Act, 1956 or Section 8
of the
Companies Act, 2013.
In case of NBFC-Factor applicant:
It shall enclose a roadmap that the company has proper planning for having financial
assets in the factoring business constituting at least 50% of its total assets and their
incomes derived from factoring business will not less than 50% of its gross income for a
specific time frame as mentioned.
In case of NBFC-IDF applicant:
- A No Objection Certificatefrom RBI regarding the sponsoring the NBFC-IDF issued to
the
NBFC-IFC. - In the last financial year, if any change in the management of the sponsor company
has
happened, such change should be detailed - Copy of the Tripartite Agreement i.e. between the NBFC-IDF, the concessionaire, and
the
Project Authority. - Details of the source of money used in startup capital along with the evidentiary
documents in support.
Here’s a video about NBFC Registration Process:
Documents Required
From All Directors And Shareholder.
- Certified copy of up-to-date Memorandum and Articles of Association of the Company.
- Banker’s Report in a sealed envelope.
- Auditors report about receipt of the minimum net owned fund.
- A certificate of Chartered Accountant regarding details of
group/associate/subsidiary/holding companies along with details of investments in
other NBFCs as shown in the Proforma Balance Sheet
