What is the Process of NBFC Registration in India?


Posted May 29, 2021 by Neail1

NBFC Registration-Key Requirements- Non-Banking Financial Companies (NBFC) do not come within the Banks ‘ legal definition but provide banking facilities and financial services.

 
NBFC Registration-Key Requirements- Understanding NBFCs!
NBFC Registration-Key Requirements- Non-Banking Financial Companies (NBFC) do not come within the Banks ‘ legal definition but provide banking facilities and financial services.
It is a well-known fact that banks are unable to meet all Indians ‘ financial needs; however hard they try; therefore, more and more companies apply for NBFC registration.
The RBI governs and controls the operation of NBFCs in accordance with the provisions laid down in Chapter III B of the RBI Act of 1934.
The segments mainly covered by the NBFCs are capital and money market instruments such as stocks, bonds, along with hire purchases, deposits, leasing, insurance, investment funds, and chit company and many more similar activities.
Soaring Popularity Of NBFCs!
NBFCs ‘ ever-increasing popularity lies in these characteristics:
1. RBI has significantly relaxed the requirements, making it easier to implement NBFC.
2. The biggest benefit given to NBFCs is the ability to build products according to the customer’s needs.
3. NBFCs enjoy complete freedom to operate from anywhere and everywhere, in the most remote places to the most advanced metros, attracting new customers and catching them.
4. Low operating costs make sure that since its inception, high profits have come their way.
5. Taking full advantage of advanced technology not only helps them attract new customers but also allows them to determine their creditworthiness. NBFC Registration-Key Requirements
Know The Different Categories Of NBFCs!
The RBI has classified the NBFCs into two categories for the purposes of registration; the first is Type-I, NBFC (NBFC-ND), and the second is Type-II, NBFC (NBFC-ND).
Type-I NBFC (NBFC-ND) Are those who do not accept public funds / do not wish to accept public funds in the future and do not have a customer interface / do not intend to have a future customer interface.
Type-II NBFC (NBFC-ND) Are those who accept public funds / expect to accept public funds in the future and/or have a customer interface/plan to have future customer interface.
The RBI endorses that Type-I NBFCs are to be subject to less stringent scrutiny or due diligence, and the processing of such applications is to be placed on the fast track to be processed. We must, however, be barred from receiving public funds or providing a company app.
Checklist Of Documents Needed For NBFC Registration
If you wish to register your business under Type-I NBFC, please note that the following documents will have to be submitted along with the specified application form:
1. Copies of the Certificate of Incorporation (COI) and the Company Launch Certificate (in the case of public limited companies).
2. Copies of key topic clause extract in the MOA relevant to the financial business.
3. Board resolution declaring that:
• The business does not carry on any NBFC operation or has halted NBFC activity and will not carry on nor continue the same before obtaining RBI registration.
• The UIBs in the category where the director has a significant interest or otherwise in the past has not accepted any public deposit and will not accept the same in the future.
• As per the RBI Guidelines, the organization has developed a “Fair Practices Code.”
• In the past, the company has not accepted public funds, nor does it keep any public funds as at the date and will not accept the same in the future without the Reserve Bank of India’s approval.
• The business has no customer interface, as is currently the case and will have no customer interface in the future without the approval of the Reserve Bank of India. NBFC Registration-Key Requirements
4. Copy of Fixed Deposit Receipt & No Lien Certificate from bankers, which indicates balances in support of Net Owned Fund.
5. Of businesses already in operation, the audited balance sheet and Profit & Loss account should be submitted together with the Directors & Auditors report, or the company is in existence for the entire period, or for the last three years, whichever is less.
6. Report of the banker with respect to the applicant company, its group/subsidiary/associate / holding company / related parties, directors of the applicant company with significant interest in other companies The report of the banker will deal with these entities as depositing entity or borrowing entity.
If you wish to register under Type-II, NBFC (NBFC-ND), then you must supply the following documents with the specified application form:
1. Certified versions of an Incorporation Certificate and a Business Start Certificate for public limited companies.
2. Certified extract copies only of the MOA’s key object clause relating to the financial business.
3- The Board of Directors resolution stating the following:
A) The company does not carry out any NBFC activity or suspends the NBFC activity and may not continue to work or start the same thing before obtaining registration from the RBI.
B) The company did not accept any public deposit, in the past (setting the period) and does not maintain any public deposit as in the date and does not accept the same thing in the future without obtaining prior approval from the Reserve Bank of India.
C) The UIBs in the group in which the manager has a significant interest or has not accepted any general deposit in the past and does not keep any public deposit as in the date and will not accept the same thing in the future.
D) The company has developed a “code of fair practices” according to the RBI guidelines.
4. A copy of the fixed deposit receipt and bankers’ certificate without concession indicating balances to support the owned net fund.
5. Existing companies, audited balance sheet account and profit and loss account along with the directors and auditors report or for the entire period in which the company is located, or over the past three years, whichever is less, must be provided.
6. A copy of the higher educational and professional qualification certificate for all managers.
7. A copy of the certificate of experience, if any, in the financial services sector (including the banking sector) from all managers.
8- Banker’s report regarding the requesting company, its group/subsidiary/affiliate / holding company / related parties, and directors of the requesting company who have a significant interest in other companies
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Issued By LetsComply
Country India
Categories Finance , Law , Legal
Tags nbfc , nbfc registration in india , nbfc registrationkey
Last Updated May 29, 2021