A non-banking financial company (NBFC) is a financial firm that lacks a banking licence but can provide consumers with financial goods and services. Loans and advances, stock acquisition, hire-purchase, financing leasing, chit funds, and other financial services fall under NBFC registration. NBFCs should be distinguished from banks by their inability to take savings or current account deposits, issue checks drawn on themselves, and provide deposit insurance or credit guarantee coverage to depositors.
Role of RBI in NBFC Registration: The Reserve Bank of India oversees and supervises non-banking financial companies. If a company’s financial assets constitute over 50% of total assets and revenue from financial assets accounts for more than 50% of gross income, it is deemed to be in the primary business of financial activity. Such a firm must obtain an NBFC license from RBI, with the 50-50 test being a common NBFC license criterion.
When is NBFC Registration Not Mandatory? Certain financial organizations are exempt from RBI’s NBFC registration requirements and rules due to being regulated by other financial sector authorities. These include Housing Finance Companies, Insurance Companies, Stock Broking Companies, Merchant Banking Companies, Venture Capital Companies, Companies that run Collective Investment Schemes, Mutual Funds, Nidhi Companies, and Chit Fund Companies.
NBFC Registration: Requirements To meet NBFC registration requirements:
- The company should already be registered as a limited company under the Companies Act 2013 or the Company Act 1956.
- The company should have a business financial plan for at least 5 years.
- A good CIBIL or credit rating.
- Net owned money must be at least ₹2 crores.
- Assets must be worth at least ₹200 crores.
- FEMA and capital compliance must be met.
- One-third of the board of directors should have financial experience.
Documents Required for NBFC Registration: Various documents must be provided for NBFC licensing, including certified copies of the Certificate of Incorporation and the Certificate of Commencement of Business, PAN/CIN, CIBIL Data relating to directors, financial statements of the previous two years, and more.
In addition to the listed documentation, additional paperwork is required to acquire an NBFC license. For further information about the necessary paperwork for an NBFC License in India, get in touch with the experts at Speed Filings right away!
NBFC Registration: Step by Step Process The NBFC registration process involves steps such as registering the company under the Companies Act, ensuring a good CIBIL score, filling out the RBI’s application form, attaching relevant documentation, obtaining a CARN number, and submitting a physical copy of the application to the RBI’s regional branch. Once the application has been verified, your NBFC license from Speed Filings will be approved or rejected. For professional assistance in navigating the NBFC licensing process, individuals can contact the experts at Speed Filings.