NON Banking Financial Company Registration
NBFC Registration are financial institutions that provide banking services without meeting the legal definition of a bank. The registration process involves fulfilling certain legal requirements and obtaining the necessary approvals from the regulatory authorities in India.
The regulations for NBFCs aim to ensure their stability, transparency, and protection of the interests of depositors and investors. These regulations cover various aspects such as capital adequacy, asset classification, prudential norms, governance, and reporting requirements. It’s important for NBFCs to comply with these regulations to operate legally and maintain the trust of their stakeholders.
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Under which act NBFC Registration?
An NBFC (Non-Banking Financial Company) is not registered under a specific act for its existence as a company. However, it requires a Certificate of Registration from the Reserve Bank of India (RBI) under the Reserve Bank of India Act, 1934.
Here’s the breakdown:
- Incorporated under: The NBFC itself is first registered as a company under the Companies Act, 2013 (or 1956), as either a private limited or public limited company.
- Registration for NBFC activities: Then, to conduct financial activities, it needs to obtain a Certificate of Registration under Section 45-IA of the RBI Act, 1934. This act regulates the functioning of NBFCs.
What is the process of incorporation of NBFC ?
In India, the registration of NBFCs is regulated by the Reserve Bank of India under the Reserve Bank of India Act, 1934. The Reserve Bank of India issues directions for NBFC registration, and operations are regulated based on these directions. A minimum net-owned fund of Rs. 2 crore is required for NBFC registration. The operations of an NBFC can only commence after obtaining a “Certificate of Registration” from the RBI.
To register in NBFC , you need to follow these steps:
- Acquire DSC and DIN for directors.
- Apply for filename approval.
- Obtain an affidavit from directors to fulfill RBI Compliance.
- Draft MOA & AOA.
- File incorporation forms with necessary documents.
- Obtain the certificate of registration from the Registrar of companies.
- Deposit Net Owned Funds in a bank account opened for the company.
- Apply for registration with RBI under RBI ACT, 1934 by filing an online application on their official website.
- You will receive a reference number for future inquiries.
- Submit duplicate hard copies of the application to the concerned regional office of RBI.
- The regional office will check the accuracy of all submitted documents.
- The regional office will send the application for NBFC registration to the central office.
- The central office of RBI grants NBFC registration only when the applicant company fulfills the prescribed requirements under section 45-IA.
What is the difference between NBFC and Bank ?
Comprehensive financial services, including deposit-taking, lending, payment services, investment products, and more, are offered by banks. On the other hand, lending and investment activities, such as loans, asset financing, and investment advisory, are primarily dealt with by NBFCs.
- Banks are government-authorized entities that provide banking services to the people, whereas NBFCs are companies that provide banking services to the people without holding a bank license.
- People prefer NBFCs over banks because lending rules and regulations are not as rigid as banks under the Companies Act. This helps borrowers receive loans with ease, and they find the loan processing less complex, which leads to high satisfaction.
What are the benefits of NBFC registration ?
When you register a non-banking financial company (NBFC), there are several benefits you can enjoy,
- Firstly, an NBFC registration allows you to legally engage in financial activities and provide various financial services to the public. This opens up opportunities for business growth and expansion.
- Secondly, being a registered NBFC enhances your credibility and trustworthiness in the eyes of customers and investors. It gives them confidence in your operations and can attract more business.
- Lastly, NBFC registration provides you with access to certain regulatory benefits and privileges, which can help streamline your operations and ensure compliance with relevant laws and regulations.
Who can apply for the registration of NBFC ?
Anyone who meets the eligibility criteria can apply for non- banking financial company (NBFC) incorporation, The eligibility requirements include having a minimum net owned fund of Rs. 2 Crores, a good track record of financial soundness, and meeting the fit and proper criteria set by the Reserve Bank of India (RBI). Additionally, the applicant should have the necessary infrastructure and expertise to carry out financial activities. It’s important to ensure that you fulfill these requirements before proceeding with the NBFC incorporation process.
What are the required documents for NBFC Registration ?
To incorporate an NBFC, you need to provide the following documents:
- The certificate of company registration.
- A bank account with a minimum paid-up equity share capital of INR 2 Crore.
- The MOA and the AOA of the applicant company or firm.
- Documents related to the location of the company.
- Duly filled-in and signed Annexure-I, II, and Annexure-III.
- Detailed information about the directors or partners of the company.
- Documents associated with the administration and management of the company.
- Well-audited financial accounts of the company for the last three consecutive years.
- Board Resolution in favor of NBFC Registration.
- A brief documentary about the company’s works and activities during the last three years.
- Income tax PAN,etc.
- Other relevant documents if requested.
Make sure to provide these documents when you applying for NBFC incorporation.
What we can offer?
NBFCs play a crucial role in the financial landscape, but they can face challenges in attracting and retaining customers. Here are some additional services that Blacktie Legal Services India LLP can offer to NBFCs to help them thrive:
Technology and Automation Services:
- Loan Management Systems: Develop or integrate loan management systems to streamline loan processing, repayment tracking, and customer communication.
- Credit Risk Assessment Tools: Provide tools and analytics to help NBFCs assess creditworthiness efficiently and accurately.
- Digital Onboarding Solutions: Offer solutions for online account opening, loan applications, and document verification to improve customer experience and reduce turnaround times.
- Cybersecurity Solutions: Advise on robust cybersecurity measures to protect NBFCs from data breaches and fraud.
Compliance and Regulatory Support:
- Regulatory Updates: Keep NBFCs informed about the latest regulations and compliance requirements set by the RBI.
- Audit and Reporting Services: Assist NBFCs with internal audits, ensuring adherence to RBI guidelines and preparing regulatory reports.
- Legal Support: Offer legal support related to financial regulations, contracts, and dispute resolution.
Marketing and Customer Acquisition Services:
- Targeted Marketing Strategies: Help NBFCs develop marketing campaigns tailored to specific customer segments.
- Digital Marketing Expertise: Assist with online marketing initiatives like social media management and search engine optimization (SEO).
- Customer Relationship Management (CRM): Implement CRM systems to manage customer interactions effectively and personalize communications.