NBFC Registration

Do not even think of NBFC Registration without fulfilling the following criteria:

  • Your NBFC must have at least 200 crores as the net fund.
  • Your NBFC should have been registered under the Companies Act 2013 or under Companies Act 1956.

Once you satisfy these criteria of the RBI, you can begin to look into the other pre-requisites like:

  • If not all, at least 25% of the Board should have the same background. 
  • Lifeline for the RBI license – A detailed business plan for at least the next 5 years.
  • Secure a good CIBIL score to register as NBFC

Ready with these requirements?

Let’s get started with the process of registration.

  1. Unique Name

Select a unique name for your NBFC that is descriptive of your NBFCs work.

  • Well defined objective

The objective of the NBFC is what increases its importance and hence, it should be crisp and appealing

  • Bank account

Open a bank account in the name of the NBFC and secure the bank’s certificate.

  • Fixed deposit

A fixed deposit is required so as to ensure the grounding and the commitment of the bank to not withdraw.

  • Promoter vision

The promoter’s vision is very essential and can actually attract a lot of weightage to the application

  • Online application

Fill the online form on RBI’s official website.

  • Documents

Submit all the required documents along with the application form.

  • CARN number generation

 A CARN number will be generated after submission.

  • Physical submission of the application

Send the hard copy of the application to the regional branch of RBI

  1. Certificate of registration from the RBI

After the application is checked and verified, the License will be given to the company

But

What exactly are the documents specifically required for the registration?

Documents Required for the Registration of NBFC:-

Documents Required for NBFC Registration

To help you better, here are some Frequently Asked Questions (FAQs)

Frequently Asked Questions (FAQs)

What is an NBFC?

An NBFC is a company that provides banking services to people without holding a bank license.

1.) It performs activities like:-
2.) Financing
3.) Acquisition of securities
4.) Hire purchase
5.) Insurance
6.) Chit fund
7.) Mutual benefit company

But does not include companies that carry activities like:-

1.) Agricultural operations
2.) Industrial activities
3.) Sale or purchase of goods other than securities
4.) Service providers
5.) Sale of immovable property

Why is an NBFC important?

The following are the reasons why an NBFC is important to the economy:-

1.) It improves the mobilization of resources or shadow banking
2.) It helps increase capital formation
3.) It provides long term credit
4.) It leads to the development of the financial market.

What are the different types of NBFCs?

An NBFC can be either a Deposit-taking Non-Banking Financial Company [NBFC-D]Or
A Non-Deposit taking Non-Banking Financial Company [NBFC-ND]

Categories of NBFC Registration

What are the fee payments required for the registration process?

Based on the company’s authorized capital, a fee is charged for:-

1.) MOA (Memorandum of Association) and AOA (Articles of Association) of the company
2.) Ministry of Corporate Affairs (MCA)
3.) Simplified Proforma for Incorporating Company electronically (SPICe)
4.) Reserve Unique Number (RUN) fee [predetermined]5.) Director Identification Numbers (DIN) fee [predetermined]6.) Digital Signature Certificate (DSC)
7.) Additional fees while submitting the application to the registrar.

What are the compliances that need to be followed post the COR by the RBI?

Here are the compliances that an NBFC needs to follow after being registered:

1.) Apply for E-KYC Registration & Regular reporting of the borrowers.
2.) Filing of NBS-9 on online RBI portal i.e. COSMOS;
3.) ROC Filings like Annual Returns, Balance Sheets, Profit and Loss Accounts, etc;
4.) Maintenance of proper accounts;
5.) Appointment of Statutory Auditor;
6.) Income Tax Returns and GST Returns;
7.) All such compliances as may occur from time to time.
8.) Adopt Fair Practice code as prescribed the RBI
9.) Adopt NBFC Prudential norms as prescribed by the RBI.
10.) Always meet and Maintain 50:50 PBC Criteria
11.) FIU Registration

Which are the best NBFCs of INDIA?

Here is a list of the top NBFCs of 2020 in India:

1st Rank

Power Finance Corporation Limited

Total Income

267377.40 million

—————————————————-

2nd Rank

Rural Electrification Corporation Limited

Total Income

224403.10 million

—————————————————-

3rd Rank

Bajaj Finance Limited

Total Income

133292.20 million

—————————————————-

4th Rank

Shriram Transport Finance Company Limited

Total Income

122768.30 million

—————————————————-

5th Rank

Indian Railway Finance Corporation Limited

Total Income

110202.32 million

—————————————————-

6th Rank

Mahindra & Mahindra Financial Services Limited

Total Income

72061.20 millions

—————————————————-

7th Rank

HDB Financial Services Limited

Total Income

70619.90 million

—————————————————-

8th Rank

Muthoot Finance Limited

Total Income

62432.00 million

—————————————————-

9th Rank

Cholamandalam Investment and Finance Company Limited

Total Income

54257.60 million

—————————————————-

10th Rank

L&T Finance Limited (erstwhile Family Credit Limited)

Total Income

52460.00 million

What are the powers RBI is having over an NBFC?

The RBI has been accorded the powers under the RBI Act 1934 like:-

1.) Registration
2.) Lay down policy
3.) Issue directions
4.) Inspect, regulate and supervise
5.) Exercise surveillance over NBFCs which comply with the defined 50-50 criteria of the principal business
6.) Penalize NBFCs for violating the provisions of the RBI Act or the directions or orders issued by RBI

What is the difference between a bank and an NBFC?

Here are the key differences between an NBFC and a bank:-

1.) An NBFC does not hold a banking license, while a bank has to have it.
2.) An NBFC is Incorporated under Companies Act 1956; whereas, a bank is incorporated under the Banking Regulation Act, 1949.
3.) An NBFC cannot accept demand deposits unlike a bank
4.) Maintenance of Reserve Ratios not required for and NBFC while it is compulsory for a bank.
5.) NBFCs do not provide deposit insurance facilities, but a bank does.
6.) Credit creation is not a process for the NBFC, unlike the banks.
7.) NBFCs do not provide transaction services, while banks do.
8.) NBFCs are not involved in payments or settlements, unlike the banks.

This article must have surely cleared out the roadway to registering you own NBFC.

Comment down and let us know if it helped you.

Newsletter Signup

Subscribe to our newsletter below and never miss the latest product or an exclusive offer.