Non-banking financial companies (NBFCs) in India are a vital part of the Indian financial service system. NBFCs have multiplied in large numbers and are serving the public at large to support the financial inclusion program with affordable credit at home. NBFCs are playing a key role in meeting the credit demands unmet by traditional banks, specifically focusing on peer-to-peer lending. Corpseed is the leading firm in India for NBFC registration.
It is a Company registered under the Companies Act engaged in the business (es) of providing financial services including loans & advances, leasing, hire purchase etc. They provide loans and advances and other credit facilities to business people or budding entrepreneurs where banks/Financial Institutions are not comfortable or say it is an alternative source of finance to businessmen. Thus, they have widened the spectrum and array of products and services offered by the financial sector. Progressively, NBFCs are gaining increasing recognition due to their customer-oriented services; flexible products, abridged procedures; flexibility and timeliness in meeting the credit needs of the seekers of credit; etc.
NBFCs in India are regulated by the Reserve Bank of India (RBI) within the framework of the Chapter IIIB of the Reserve Bank of India Act, 1934 and any rules made thereunder or any directions issued by it under the Act. It is prima facie that the NBFC can be Companies registered under the Companies Act, 1956/2013 with the object clause of financial activity and the same need to take approval from the Regulator Reserve Bank of India RBI) before commencing the business of finance. Upon approval of the RBI, the Company can start the financial business and the entity should maintain the Principal Business Criteria (PBC) regularly.
Financial Activity as “Principal Business” implies that financial assets of the Company shall constitute more than 50% of the total assets of the Company and income from such financial assets shall constitute more than 50% of the gross revenue of the Company, is termed as “PBC”.