Call us
Let's chat? - We're online

Hi 👋! Please fill out the form to chat with next available agent.

Hello ! Welcome to Corpseed, and thank you for visiting us. How can we help you today?
Tell us more about your requirements

NBFC Sale in India: In and out Strategy of NBFC Business in India

NBFC Sale in Inda - In and out Strategy of NBFC Business in India - Corpseed.jpg

Introduction: Finance Business

Finance business, specially lending is very attractive segment since ancient time. Almost all of us has witness the lending transaction in our home, society, town and across the country, either organized or un-organized. Short term or long term, secured or unsecured, personal or professional whatever may be the case, people do need fund to run and it is been now integral part of human life. Finance is been prime source of every aspects of human and business life. Corporate do need fund and obviously approach financial institution like Bank, Corporation, Non-Banking Financial Company or else. However even Individual unlike earlier now a day approach at least Non-banking financial company against the money lenders available in town, due to the effect of rate of interest.

Read Our Blog: Process to Apply for NBFC Registration in India

Due to all time high demand of finance in the market from both the perspective either personal or commercial, the need of such organization and its business potential is high. Though market has good tune of players list, but still we can observe so many people and corporate are dying for fund i.e. accessible fund effective rate of interest, collateral free and less stringent process to get it. As the entire Banking and financial system of India is often been criticized due to length process and validation of collateral and so on. On top of it, obviously rate of interest and processing fees are thereon.

On the crux, market has always welcomed the new player and often the existing player leaves the market by any of reason. Generally new player has to go with very stringent and lengthy process of licensing as it is matter of country’s financial eco-system. And in the other hand license holder willing to leave the market due to the rapid technological growth, product variation and actual exit on good returns of same. Therefore, as financial eco-system “In and out” is generic process. No worries, either of case the segment does run and live the market tantrum accordingly.

In this article, we will be focusing on exit from existing business instead of fresh registration and license procedure. However, the fresh license and its process can be accessed from NBFC Registration

Market Presence:

While discussing on finance business and more precisely on Non-banking finance company, around 12k registered and license Non-Banking Finance Company (NBFC) across its category in the market as per Reserve Bank of India (RBI), published data. Out of registered NBFC, so many are in the market who are in the process to exit from it. Existing NBFC can get out of it from three ways i.e.

  • Surrender of its license to RBI
  • Cancellation of license by RBI due to non-compliance of RBI regulation
  • Transfer of Control or Sale of business

Well, first one is choice of owner that instead of sale of his/her business the Board decides to go to RBI and apply for surrender of license. Which can be completed only if the applying entity does not have any financial business or the principle business criteria is not met by entity.

On the other hand, the license entity is required to maintain and submit the data as prescribe in its guiding law on given interval. Fail to do so and severe issue on compliance of prescribed set of regulation mandate to NBFC, the RBI can cancel the its license after giving opportunity of being heard. While cancelling the license the order will be speaking order and need to complied by NBFC on priority.

Both the option is not so wise to existing owner of NBFC as far as commercial is concern, so the third one might be breakthrough for existing NBFC to avail the benefits of commercial while leaving the institution. And it’s fair trade practice. In fact, the company is also assets and provision of prescribed law has given fair process of buy and sale of any business/company across the India.

Discussing the actual One:

Talking about the 3rd options i.e. Transfer of Control or Sale of Business, point to consider and get the same been complied are listed below. It can be majorly discussed into two aspects, i.e. Reserve Bank of India and Ministry of Corporate Affairs (MCA).

Transfer of Control to transact the sale of business is tested by Change in Board of Directors and Transfer of Shares from existing to new one. And for this, the RBI has issued guidelines in 9th July, 2015. Kindly note we are discussing the sale of business or transfer of control not change in object, name change or changes of registered address of business, as all this kind of requirement is often ancillary with assignment of change in control or sale of business.

As the NBFC is RBI regulated again the replacing Board of Director should possess the skillset, experience and academic qualification required for doing finance business. The logic is to satisfy department itself the replacing board has more promising team to excel the running business into new height. Similarly, the person who are buying the shares, should have clean money and proper records of transaction with other commercial law of country. These two aspects have major role on success of transfer of control or sale of business.

Decoding the RBI Process:

The both seller and acquirer jointly need to put an application to Regional Reserve Bank of India, where the NBFC is incorporated. As the process will be led by NBFC regarding the application, follow up and other stuff are only possible by NBFC as it is required to coordinate with regional RBI.

Documents Checklist:

Applicant NBFC should conduct board meeting and resolve the transaction with an approval of its shareholders either in Annual General Meeting or Extra Ordinary General Meeting, to get this transaction done. Board should issue the appointment resolution and power of attorney if other than Board of Directors represent the case in front of regional RBI on behalf of NBFC.

Application should consist following documents with its for RBI application to get prior approval for sale of business or transfer of control.

  • Information about proposed directors/shareholders as per the given format
  • Acquiring shareholders sources of funds
  • Declaration by the proposed directors/shareholders that they are not associated with any unincorporated body that is accepting deposits, earlier if applied then the application been not rejected by RBI and no criminal offense, including offence under section 138 of the Negotiable Instrument Act, against them
  • Banker’s report on the proposed directors/shareholders

Once regional RBI review the submitted application, will issue further query if any on the application otherwise will approve the application. Then a public notice of at least 30 days shall be given before effecting the sale of, or transfer of the ownership by sale of shares, or transfer of control, whether with or without sale of shares.

Decoding the Ministry of Corporate Affairs:

Once RBI approval receipt, then based on same appointment of director resolution will be passed and duly appointed with a due process of share transfer from existing to new shareholders. Required forms are filed to Ministry of Corporate Affairs to update the Master Data of company. Accordingly, the register and other documents are prepared and put it into records.

Before RBI and MCA Process:

As you been buyer, buying something which you may know at all or may not be. Accordingly, being seller in this process, again you need to know to whom you are selling your entity. In fact, it is the process of knowing each other without impacting the entire process. There you need to have one experience consultant to ease out the process, as the transaction involve various compliance from day one to end point. There we stand to serve you. Accordingly, we facilitate the interested people to match their requirements and also give them an ease of stringent process with no more headache for the entire process. As the involvement is many, time taken by RBI to phase out the application is also very good time, beyond 6 months or more. Till date, regular follow-up and update is most to serve their questionnaire on time and submission of documents.

Read Our Blog: RBI proposes regulatory changes for NBFCs. Here's all you need to know.

Process to Application and Churn out the Deal:

Initially either buyer or seller, with us has their own unique requirement. According the basic requirement are finalized then,

Seller will onboard with us on our agreed terms and accordingly buyer also onboard with us on agreed terms and condition.

Then due diligence is done for both the parties. Once found goof to go then the Term sheet will be signed mentioning the process and timeline for each act thereon with release of payment. 

Generally, the buyer needs to release 10-15% of deal price as a token money for the process, the day prior approval is received from RBI and rest consideration are transfer and sale of shares are executed after 30 days public notice jointly.

In this way, the transfer of control or sale of business is completed.


Concluding the article, it is note worthy that the simple is not easy and obviously involve good tune of complexities as far as finalizing the share transfer value, genuine premium value, tax burden and all. The entire gamut needs to take care of, accordingly with experience hand else same can be ended with great mess for both buyers and sellers. Therefore, for any need of assistance undoubtedly get in to touch with Corpseed.

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.


Get help from an experienced legal adviser. Schedule your consultation at a time that works for you and it's absolutely FREE.


Experienced Digital Marketer with a demonstrated history of working in the internet industry. He likes to write about the latest technology trends, Skilled in Digital Marketing likes. Search Engine Optimization, SMO, SEM, PPC, Content Writing, ...

Learn More >>

Give us your feedback

What do you think about this article?