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What Is The Procedure For NBFC Registration In India

Author: Swarit Advisors
by Swarit Advisors
Posted: Jun 16, 2018

An NBFC stands for the non-banking financial company. This is a kind of company that is involved in the principal business of giving out or lending money, investing in shares, investing in shares, the stock market, bonds of any kind as well as debentures, leasing and hiring purchase, business in insurances and chit business. The non-banking financial company carries on its all financial operations under the guidelines of the reserve bank of India. The Reserve bank of India governs all the operations operated by the non-banking financial companies.

What is the legal law system of NBFC?

Here we’ll see some background of NBFC companies. The NBFC Company is based under the companies’ act of 1956 which later was updated as companies’ act 2013. The activities of NBFC Company are similar to that of a regular bank except few differences.

What is the difference between NBFC and a regular commercial bank?

Some of the basic differences are as followed:-

  1. The non-Banking financial companies can’t accept any demand deposits.
  2. Non-banking financial companies can’t issue any cheque that is drawn by the bank deposits which are insured by the insurance deposits and Credit Guarantee Corporation. However, the deposits in non-banking financial companies are not insured.

The non-Banking financial companies are principally categorised into two types. The deposit-taking a non-banking financial company and deposit taking non-banking financial company. There is further clarification based on the sizes, there are many different types of NBFCs like the asset finance company, the investment company, loan companies and infrastructure finance, debt fund as well as microfinance institutions.

How to get NBFC Registration in India?

Now as per the section 45 IA of the reserve bank of India, none of the companies shall commence a business of non-banking financial company without getting an NBFC Registration certificate. And this NBFC Registration can’t be done unless you have a net owned fund of Rs 200 lakhs. Therefore the very basic requirement for NBFC Registration is the minimum of net owned funds of Rs 200 lakhs. Here the net owned funds are supposed to mean that it’s the balance of the owned funds of Rs 200 lakhs minus the amount of the investments in shares of subsidiaries. The owned funds are an aggregate of the paid-up capital of the equity.

Follow the procedure of online NBFC Registration

Following are the steps of NBFC Registration procedure:-

1. The formation and the incorporation of the company.

The company that you desire to build must be registered under the new Indian companies’ act 2013.

2. Minimum net owned capital.

The minimum amount should be Rs 2 crores which is paid up equity share capital.

3. Open a fresh new bank account.

The capital required has to be kept somewhere in deposit, and this capital should be free from all liens and generally, such an amount is managed and kept in the form of an FD or a fixed deposit. While you are making the application for NBFC Registration certificate to the reserve bank of India, this amount will need to be maintained as it’s verified by the Reserve Bank of India of the deposits of the concerned bankers.

4. Make an application for the NBFC Registration certificate.

The candidate is supposed to submit the application for NBFC Registration certificate online to the reserve bank of India, after which the applicant will get a reference number. Later on, the company is supposed to submit a hard copy of online application along with the required documents to the supposedly concerned regional office of the Reserve Bank of India.

Following are the documents required for NBFC Registration certificate

  • Annexure I, II, III.
  • All the information that is regarding the incorporation of the supposed company.
  • The memorandum of association and articles of association of the company.
  • The documents that are related to the administration and management of the company.
  • The location of the company.
  • Audited financial accounts of the company.
  • Income tax PAN Number etc.
Once you submit it all, everything will be verified and an NBFC Registration certificate will be granted. For further queries, you may contact experts at Swarit Advisors anytime.
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Write has expertise in writing on legal services like Gst, Trademark, Patent, Fssai, Msme, company registration etc.

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Author: Swarit Advisors

Swarit Advisors

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