Introduction: Non-banking Financial Companies
NBFCs or Non-Banking Financial Companies are the companies incorporated under the Companies Act 2013. NBFCs provide banking services without meeting the legal definition of a bank. According to Section 451(c) of the RBI Act, a Non-Banking Company carrying on a business of a Financial Institution will be an NBFC. It is governed by the Ministry Of Corporate Affairs as well as The Reserve Bank of India.
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NBFCs are companies engaged in the business of loans and advances, acquisition of shares, stock, bonds, debentures, and securities issued by the Government or any local authority. The main objective of this type of company is to accept deposits under any scheme or manner.
Cancellation of NBFC license
The RBI if at any time finds NBFC is not conducting business in the manner specified in the Act or acting against the public interest then he can cancel the certificate of registration granted to an NBFC.
At any time if the Non-Banking Financial Company found the following situation can result in the cancellation of the Certificate of registration granted:
- NBFC ceases to carry on the business of a non-banking financial institution in India
- NBFC failed to comply with the conditions of registration specified under the Act and any additional conditions specified by the RBI at the time of issue of the Certificate of registration. Like example fails to maintain the minimum paid-up capital
Requirement i.e. Went to Below 2 crore
- NBFC fails to fulfill the conditions specified above in respect of affairs and capital of the Company.
- NBFC fails to comply with any direction issued by the Reserve Bank of India.
- NBFC fails to maintain the books of accounts in accordance with the provisions of the Act or RBI directions.
- NBFC fails to submit its books of accounts and any other relevant documents to the RBI for inspections.
- NBFC has been prohibited from accepting deposits by an order made by the RBI and the order has been in force.
Appeal Against Cancellation:
- The RBI, before passing an order of cancellation, shall give an opportunity of being heard to the Company unless it is in an opinion that the delay in canceling the certificate of registration will be prejudicial to the public interest or the interest of the depositors or the non-banking financial company.
- The aggrieved party may appeal against the order of the RBI to the central government within 30days from the date of the order of cancellation of registration.
This portion of the site is for informational purposes only. The content is not legal advice. The statements and opinions are the expression of author, not corpseed, and have not been evaluated by corpseed for accuracy, completeness, or changes in the law.
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