NBFC Requirements

Ours this diligently drafted, highly enlightening, and hugely beneficial web-article provides opulent information about the non-banking financial companies (NBFCs) in India and abroad, businesses and services of these companies, NBFC registration criteria in India, the documents necessary for registration under the category of NBFC, and the entire procedure for NBFC registration in India.

A Non-Banking Financial Company (NBFC) is the financial institution, other than the Commercial and Cooperative Banks, which provides a variety of banking and non-banking services (often called as the Shadow Banking services) to the interested or concerned people and companies, under certain terms and conditions. These companies do not hold proper banking licenses, but do follow strictly the rules and regulations of the RBI which are promulgated from time to time. The usual and most popular business fields of NBFCs in general, are industrial and commercial loans and advances, deposits, leasing, hire-purchasing, insurance business, investment funds and chit business, instruments of the capital and money markets such as stocks and bonds, and many other similar activities. The working and activities of these NBFCs in India are critically supervised and regulated by the RBI strictly in accordance with the provisions and regulations provided in the Chapter III B of the RBI Act of 1934. Since December 2006, there are three broad divisions of these companies in India, the loan companies, asset finance companies, and investment companies.

Generally, these NBFCs raise capital funds from the public depositors and investors directly and indirectly, and lend these to all categories of borrowers, under certain strict and rigorous terms and conditions. Thus, these NBFCs not only bridge the gap between the investors or depositors and the borrowers, but also perform the welcome role of an amiable and helpful intermediary between the institutions in the financial and banking sector and the public investors and borrowers. The most common and regular clients and customers of these glamorous companies are wholesale and retail traders, small-scale industries, companies and institutions, industrialists, entrepreneurs, professionals, and investors. Thus, NBFCs are really very supportive and beneficial companies, and are therefore, rapidly becoming active and admirable complementary to the institutions in the banking and financial sector in every prospering country of the world, including India.

• The desirous company or firm must be duly registered as per the new Indian Companies Act of 2013, or earlier Companies Act of 1956.
• The applicant company should be engaged in any one of more fields which are illustrated above
• The interested company must have a minimum disposable Net Owned Fund (NOF) of INR-2Crore (as increased since April 1999). For the foreign investors and companies, this minimum amount of NOF is INR-5Crore.
• If the total financial flow in the businesses of a company in any of the said fields, exceeds 50% of the total asset of the company, then compulsory is registration of the business under NBFC category.

Services offered by NBFC

• NBFCs offer all types of banking services including credit facilities, trading in money and capital market instruments like shares, stocks, equities, securities, debentures, bonds issued by local authorities or government bodies; offer private education funding, offer loans for varied purposes, retirement planning, and many more.
• NBFCs perform all those services that need managing portfolios of equities, debentures, bonds, stocks and shares under wealth management system, and also offer worthy suggestions and recommendations over the several corporate legal aspects such as taxation, merger and acquisition, auditing, and lots more.
• Offer services in respect of market analysis, corporate competition reading, and feasibility preparation, etc., while assisting the client companies with funds and loans.
• Every year a large number of companies in the industrial segments, venture capital companies, and companies in the retail segments, turn out as reputed non-banking financial companies, along with serving to their respective industries.

Documents Required for NBFC Registration

• The certificate of company incorporation
• Bank Account with a minimum paid up equity share capital of INR-2Crore
• The MoA and the AoA of the applicant company or firm
• Document related with the location of the company
• Duly filled-in up and signed Annexure-I, II, and Annexure-III
• Detailed information about the directors or partners of the company
• Documents associated with the administration and management of the company
• Well-audited financial accounts of the company for last three consecutive years
• Board Resolution in favor of NBFC registration
• A brief documentary about the company's works and activities during the last three years.
• Income tax PAN, etc.
• And, other relevant documents if requested

NBFC Registration / Formation Criteria and Procedure

After formation and registration of the company under the Companies Act of 2013, the nest step in the NBFC formation procedure or process is gathering of the minimum required equity share capital of INR-2Crore. Preparation of the above-mentioned documents is the next phase in this NBFC registration process. Our internationally exalted and veteran company lawyers offer these all services expertly and expeditiously.

The application form for NBFC registration is readily obtainable from the RBI's secured website; www.rbi.org.in. After filing the online application with the RBI website, the applicant will get a Company Application Reference Number (CARN), for making enquiry about the current status of the registration process. After this, the applicant company requires to apply to the concerned Regional Office of RBI, with the hard copy of the online application in duplicate, the given CARN, and all prescribed documents. On receipt of the application the Regional office examines and verifies all particulars and facts, and then sends that to the Central Office of RBI for approval. The central office grants the desired NBFC registration certificate, only when all requirements and conditions mentioned in the Section 45-IA of the RBI Act of 1934, are met and satisfied fully by the applicant company.