Process to Apply for NBFC Registration in India
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Knowing About NBFC’s
A non-banking financial company, as put forth by the RBI Act, means a financial entity that is a company which is registered under the provisions of the Companies Act, 2013. This company is found to be engaged in the activities related to advances and loans, securities acquisition which are issued by the government of India and other bonds and stocks. It also includes under its garb the following:
- Insurance business
- Chit funds business
However, it does not include under its regime, any institution whose business (principle) is related to that of sale or purchase of goods, any activity that is industrial or agricultural in nature etc.
Read Our Blog: Non-Banking Financial Companies Registration in India
On the other hand a residuary non-banking company consists of the company that is engaged as under any scheme in the activity of receiving deposits by means of contributions.
There are various types of NBFC’s which are enumerated as follows:
- Mortgage guarantee company
- Loan company
- Asset finance company
- Core investment company
- Infrastructure finance company
- Housing finance company
- Microfinance company
- Investment company
What makes NBFC’s different from Banks?
NBFCs lend and invest, so their operations are similar to those of banks; nevertheless, there are a few exceptions, as mentioned below:
- Demand Deposits cannot be accepted by the NBFC’s
- NBFC’s do not comprise being a part of the system related to payment and settlement and also cheques cannot be issued by them which are drawn on itself.
- NBFC depositors, unlike bank depositors, are not covered by the Deposit Insurance and Credit Guarantee Corporation's deposit insurance programme.
How to go about registering an NBFC?
- Firstly, it is important that the company must get registered as under the provisions of the company’s Act.
- The net held funds of the company need to be at least Rs. 2 crore..
- At least one director with much the same background should be present in the company.
- In order to register as an NBFC, you must have a decent CIBIL score.
- After that, you must fill out an application form present on the RBI's official website.
- The application form must be submitted together with the requisite documents.
- Following that, upon successful submission of the application, a CARN number will be created.
- Make sure that the regional branch of the RBI must be facilitated with the application form’s hard copy.
- The company would be granted with the license on successful checking and verification of the application.
Registration of NBFC: Requirements
A company formed under the Companies Act of 1956 that wishes to operate as a non-banking financial institution as specified by Section 45-I (a) of the RBI Act of 1934 must fulfill the enumerated requirements:
- It must be indeed a company formed by virtue of Section 3 of the Companies Act of 1956.
- It should have a net held fund of at least 200 lakh rupees.
NBFC Registration: Application
The applicant company must apply online and send a hard copy of the application together with the necessary documentation to the Reserve Bank of India's Regional Office. The application can be uploaded online at https://cosmos.rbi.org.in, which is a reliable website run by the RBI. User ids are not needed at this time so the company that is applying would not need to log in to the COSMOS application. On the page that talks about login of the COSMOS Application, the company should press on "CLICK" for registration of company. A window will appear with the Excel application form which the users can download.
Read Our Blog: NBFC Registration Process in India
The company will then download an appropriate application form from the given website, fill it out, and submit it. Thereafter the company would be required to indicate the regional office’s correct name. A reference number would then be generated. Application’s status can then be checked by the company.
NBFC Registration: Required documents
The minimum documents that are required to initially start an NBFC are as follows:
- Documents related to ID Proof
- Proof of the address
- Photograph( passport size)
- PAN card copy and company’s CIN
- Company’s brochure must be submitted together with the details with respect to the management.
- Submission of MOA and also AOA.
- Company’s CIBIL is required.
- Certified copy of the Fair practices Code is required to be submitted.
- The Statutory Auditor must issue a certificate stating owned funds as of the date of the submission.
- Details as to the company's long-term strategy, usually for the next three years, as well as projected balance sheets, cash flow statements, and other statements related to income.
- It is essential to provide a self-certified copy related to bank statement and tax returns.
NBFC Registration: Fees
The fees that must be paid in order to register an NBFC are divided into several categories, which are described below:
- A fee centered on the company's authorized capital must be given to the Ministry of Corporate Affairs when the company is being registered.
- Filling out the Simplified Proforma for Incorporating a company Electronically (SPICe) can also necessitate the payment of requisite fees.
- The MCA charges a predetermined fee for RUN and DIN.
- Additional fees must be paid before sending the application to the registrar.
What norms need to follow by NBFC?
When the company has obtained a legal license, it must observe the enumerated rules:
- Deposits that are payable on demand cannot be received by NBFC’s.
- The company should be able to accept public deposits for a minimum of 12 months and a maximum of 60 months.
- Annually, the company must file an audited balance sheet.
- Every six months, the credit rating must be obtained and forwarded to the RBI.
- The Company's interest rate cannot be higher than the limit set by the Reserve Bank of India.
Hence, it can be said that the NBFC simply means a non-banking financial company that is required to be registered as a company in India.