All about NBFC Registration Online Process and Cost in India
A Non-Banking Financial Company (NBFC) is a company that is registered under the Companies Act of 2013 and is engaged in the business of loans and advances, the acquisition of shares/stocks/bonds/debentures/securities issued by the government or a local authority, or other marketable securities of a similar nature, leasing, hire-purchase, insurance, and chit business.
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Introduction: NBFC Registration
A Non-Banking Financial Company (NBFC) is a company that is registered under the Companies Act of 2013 and is engaged in the business of loans and advances, the acquisition of shares/stocks/bonds/debentures/securities issued by the government or a local authority, or other marketable securities of a similar nature, leasing, hire-purchase, insurance, and chit business.
Non-Banking Financial Companies (NBFCs) do not have legitimate banking licenses like commercial banks, but they do offer a variety of very supportive and helpful services to public depositors, borrowers, and investors in some areas of business (after receiving an NBFC License from the RBI).
The following two requirements must be met by any entity seeking an NBFC license from the RBI:
- It must be a corporation formed under the Companies Act of 2013.
- It should be a corporation with a net worth of at least INR 2 crores.
Procedure for Obtaining an NBFC License from the RBI
How to Obtain an NBFC License from the RBI?
RBI has made the NBFC registration process easier for applicants by giving them an online platform. To obtain a license from RBI, an existing firm or a newly created company under the Companies Act 2013/1956 must complete the following registration process.
- The applicant company must apply online if it was formed under the Companies Act of 2013. The application can be submitted at RBI's official website, which is a secure website.
- The organization can download a relevant application form from the aforementioned website, fill it out, and submit it.
- The company must submit a hard copy of the application form (showing the online Company Application Reference Number, along with supporting documentation) to the applicable RBI Regional Office after filing the online application.
- The organization can then use the above-mentioned secure address to check the progress of the application by entering the acknowledgment number.
The following two requirements must be met by any entity seeking an NBFC license from the RBI:
- It must be a corporation formed under the Companies Act of 2013.
- It should be a corporation with a net worth of at least INR 2 crores.
The following shall be considered as the formula for obtaining the Net owned funds of the company:
The Reserve Bank of India regulates NBFCs in India (RBI). According to RBI guidelines, an NBFC cannot do non-banking financial activities unless it has a certificate of registration from a bank (save for NBFCs that are not regulated by the RBI) and Net Owned Funds of Rs. 2 crores.
Net Owned Funds can be computed using the firm's most recent audited balance sheet. Total Owned Funds will be made up of paid-up equity capital, free reserves, share premium account balance, and capital reserve. Deduct Revaluation Reserves, Balance of Accumulated Loss, and the book value of Intangible Assets from Total Owned Funds to arrive at Net Owned Funds. If any investment in shares of other NBFCs, debentures, or shares of subsidiaries and group companies exceeds 10% of the owned funds, the Net Owned Funds would be deducted.
Documents Required For NBFC Registration:
- Certificate of Company Incorporation.
- Detailed information on the management team, as well as a company brochure.
- A copy of the company's PAN/Corporate Identity Number (CIN).
- Documents pertaining to the location/address of the office.
- The Memorandum of Association (MoA) and Articles of Association must be certified (AoA).
- A list of directors' profiles must be supplied, with each director's signature.
- The company's directors' CIBIL/credit reports are required.
- A copy of the board resolution certifying that the company has not engaged in or stopped engaging in NBFC activity and will not engage in any until the RBI grants registration.
- A board resolution on the "Fair Practices Code" must be approved and a certified copy supplied.
- The statutory auditor issues a certificate declaring that the corporation does not hold and does not accept the public deposit.
- The Statutory Auditor must issue a certificate identifying owned money as of the date of the application.
- It is necessary to provide information on the bank account, balances, loans, and credits, among other things.
- Audited balance sheet and profit and loss statement, as well as the directors and auditors, report for the previous three years, must be submitted if relevant.
- It is necessary to provide a self-certified copy of the bank statement and income tax returns.
- Information about the company's long-term strategy, usually for the next three years, as well as projected balance sheets, cash flow statements, and income statements.
Fees for NBFC Registration:
The fees that must be paid in order to register an NBFC are divided into many categories, which are listed below:
- A charge depending on the business's authorized capital must be paid to the Ministry of Corporate Affairs when the firm is registered (MCA)
- A firm would also have to pay fees for the company's MOA (Memorandum of Association) and AOA (Articles of Association) based on the permitted capital and a few other considerations or you can consult with an NBFC consultant to know more.
- Filling out the Simplified Preformat for Incorporating a Company Electronically (SPICe) may also need the payment of certain costs.
- Reserve Unique Numbers (RUNs) and Director Identification Numbers (DINs) are required (DIN), While registering the company, a fee based on the authorized capital of the company is to be paid to the Ministry of Corporate Affairs (MCA)
- A company would also need to pay fees on the basis of the authorized capital and other factors for the MOA (Memorandum of Association) and AOA (Articles of Association) of the company
- Simplified Proforma for Incorporating Company electronically (SPICe) filling might also require the company to pay certain fees
- For a Reserve Unique Number (RUN) and Director Identification Numbers (DIN), a predetermined fee is to be paid to the MCA
- A Digital Signature Certificate (DSC) is required for every director and thus its generation would require a payment of periodic fees
- Additional fees are required to be paid while submitting the application to the registrar.
How to start an NBFC Registration:
About the Author
Shamshad Alam
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