NBFC Registration
NBFC means Non-Banking Financial Company which is registered under the Companies Act, 2013. It mainly includes the business activity like loans and advances, acquisition of shares/stocks/bonds/securities which are issued by government or local authority. An NBFC can carry on the business only after obtaining a NBFC license from RBI. There are mainly two types of NBFC i.e. Deposit taking NBFC and Non-deposit NBFC.
What Are The Types Of NBFC?
Asset Finance Company
The main business of these companies is to finance the assets such as machines, automobiles, generators, material equipment’s, industrial machines etc.
Investment Company (IC)
The main business of these companies is to deal in securities.
Loan Companies (LC)
The main business of such companies is to make loans and advances
Infrastructure Finance Company (IFC)
A company havingminimum net owned funds of at least Rs. 300 Crore and has deployed 75% of its total assets in Infrastructure loans is called IFC provided it has credit rating of A or above and has a CRAR of 15%.
Systemically Important Core Investment Company (CIC-ND-SI)
It is an NBFC which is carrying on the business of acquisition of shares and securities which satisfies the prescribed conditions.
Infrastructure Debt Fund (IDF-NBFC)
IDF-NBFC is a company registered as NBFC to facilitate the flow of long term debt into infrastructure projects. IDF-NBFC raise resources through issue of Rupee or Dollar denominated bonds of minimum 5 year maturity. Only Infrastructure Finance Companies (IFC) can sponsor IDF-NBFCs.
Non-Banking Financial Company – Micro Finance Institution (NBFC-MFI)
NBFC-MFI is a non-deposit taking NBFC which has at least 85% of its assets in the nature of qualifying assets which satisfy the prescribed conditions.
PREREQUISITES FOR NBFC REGISTRATION
- It must be a company registered under Companies Act 2013
- It must have a minimum equity net owned fund of Rs. 2 Crore
- The CIBIL record must be clear
- At least one Director must be from NDFC background or senior banker as full-time director in the company.
- First the company must be registered under the companies act 2013
- The main object in the MOA must be financial business
- After the company is incorporated an online application is to be filed in RBI website
- Submit the hard copies of the documents to RBI
- Certified MOA and AOA of companies
- Profile of Directors along with their educational qualifications and work profile
- Respective Board Resolution related to authorised signatory, has not accepted any public deposit in the past or without the prior approval of RBI.
- The Company should give a Board Resolution stating that it will not carry any NBFC unless it get registration with RBI
- Last three years audited financial statements for companies which are in existence
- Business plan of the company for the next three years
- Details of bank statement and bank account details.
- Institution whose principal business is of agriculture
- Business engaged in industrial activity
- Business engaged in purchase or sale of any goods or services
- Business engaged in sale/purchase of immoveable property
- It cannot receive deposits repayable on demand
- Cannot issue cheques drawn on itself
- Public deposits can be taken for a minimum period of 12 months and maximum for a period of 60 months
- The interest rates on deposits cannot be higher than the ceiling rate as prescribed by RBI
- The deposits are not insured and their repayment is not guaranteed by RBI.
- Provide loans and credit facilities with more ease than banks
- Less compliances than bank
- The process of loan in NBFC is more faster as compared to banks
- Competitive Interest rates
- Availability of loans for those with poor credit history
NBFC’s provide all types of financial services similar to banks with two major differences – they do not hold a banking license and they cannot accept monetary deposit from individual customers.
NBFC’s are recognized as complementary to the banking sector as a result of the implementation of innovative marketing strategies, the introduction of tailor-made products, customer-oriented services, attractive rates of return on deposits and simplified procedures, etc.The NBFCs has introduced various innovative products such as IPO financing, three-wheeler financing, vehicles financing, small personal loans, finance for tires & fuel, asset management, mutual fund distribution and insurance advisory, etc.
Source url - http://www.nbfcregistration.flazio.com
