Online NBFC Business Registration Process– Non-banking financial company, aka NBFC, primarily refers to a private lender that operates under RBI without a bank license. They operate like a traditional bank and are best known for their prompt and hassle-free credit facilitation. However, one must not confuse NBFCs with banks since the former can offer a limited portfolio of services, excluding accepting deposits and savings, issuing cheques drawn on itself, and rendering credit guarantee coverage. Primarily, NBFC can only engage in activities such as disbursement of loans, share acquisition, finance leasing, chit fund, hire-purchase, etc. Banks typically leverage a stringent assessment for loan disbursement, unlike NBFCs. That is why most individuals and businesses with feeble credit profiles approach NBFCs for financial aid. The presence of NBFCs promotes financial inclusivity and strengthens the nation’s economy. Those seeking to operate as NBFC need to apply for NBFC Business Registration Online helmed by RBI. As with other financial institutes, NBFCs are also entitled to operate in a specified manner as advised by the Reserve Bank. To operate as an NBFC, a firm needs to comply with various pre- and post-registration norms. With that being said, let’s take a brief walkthrough of NBFC Business Registration Online and compliances.
Eligibility criteria for Online NBFC Business Registration
Before you apply for NBFC Business Registration Online, you must get accustomed to the eligibility criteria:
- The company must be registered under the Company Act 2013.
- The company must have drafted business financial planning for the upcoming 5 years at least.
- Good CIBIL score or credit rating
- The minimum net owned fund should not be less than Rs. 2 crore.
- The overall worth of the company’s assets should not be less than Rs. 200 crores.
- The company should be in adherence to capital compliance and FEMA.
- One-third of the directors should have adequate experience in the financial realm.
Types of NBFC’s operating in India
NBFCs in India can operate as one of the following:
- Deposit accepting NBFC’s
- Non-deposit accepting NBFC’s
With that being stated, let’s take a closer look at the list concerning the types of NBFC’s that operate in India.
- Asset Finance Company
- Investment company
- Loan company
- Infrastructure finance company
- Systemically Important Core Investment Company (CIC-ND-SI)
- Infrastructure Debt Fund
- Non-Banking Financial Company Micro-Finance Institution (NBFC-MFI)
- Non-Banking Financial Company Factors (NBFC-Factors)
- Mortgage Guarantee Companies (MGC)
- NBFC Non-Operative Financial Holding (NBFC-NOFHC) Company
- Residuary non-banking company
Documents you need when applying for Online NBFC Business Registration
The list of documents required when applying for Online NBFC business registration is as follow:
1. Certified copy of the Memorandum of Association (MoA) and Articles of Association (AoA).
2. Certificate of Company Incorporation.
3. Information regarding the bank account, balances, loans, credits, etc. is to be furnished.
4. Detailed information about the management along with a company brochure.
5. A copy of the PAN/Corporate Identity Number (CIN) of the company.
6. List of Directors’ profiles duly signed by each director must be attached.
7. A copy of the board resolution certifying that the company has not carried out or stopped NBFC activity and will not carry any until RBI registration is granted.
8. Certificate issued by the statutory auditor stating that the company does not hold public deposits and does not accept them as well.
9. Certified copy of the board resolution on ‘Fair Practices Code’.
10. Certificate specifying owned funds as of the date of the application from the Statutory Auditor.
11. If applicable, audited balance sheet and profit and loss statement along with directors’ and auditors’ reports of the preceding three years.
12. Self-certified copy of the bank statement and Income Tax Returns.
13. Information detailing the company’s future plans, generally for the next 3 years, along with projections of balance sheets, cash flow statements, and income statements.
14. Documents related to the office location/address.
15. CIBIL/credit reports of the Directors of the Company are required.
How to Register as NBFC?
Step 1: Register your company under prevailing legislation like Companies Act 2013.
Step 2: Arrange the minimum NoF (Net Owned Funds) with an estimated worth not less than Rs 2 crores.
Step 3: One of the directors from the company’s management should have a professional experience in banking and financial services.
Step 4: Next, visit the online portal of RBI for filling out registration application.
Step 5: Next, visit RBI’s official website to fill out and submit the application form.
Step 6: Upload the mandatory paperwork as cited in the aforementioned section.
Step 7: Secure the CARN number upon successfully submitting the online application.
Step 8: Visit the regional branch of RBI and submit the hard copy of the application.
Step 9: After the application is thoroughly vetted by RBI, the license shall be granted to the applicant.
Registration Requirements for Online NBFC Business Registration
NBFCs in India fall under the ambit of the Reserve Bank. As per RBI, no NBFC can pursue the principal business unless they have RBI’s approval in the form of a certificate and NoF amounting to Rs 2 crores at least. However, NBFCs seeking to operate as NBFC-MFIs, NBFC-Factors, and CIC are not liable to comply with this requirement. Notably, the companies must take the last audited balance sheet into account for the NoF’s estimation.
Here is the mathematical expression for calculating the NoF.
NOF = Paid-up Capital + Free Reserves + Other Surplus Funds – Intangible Assets – Accumulated Losses – Deferred Revenue Expenditure
Note: If the estimated worth of investment in shares of other NBFCs or debentures and shares of subsidiaries exceeds 10% of the owned funds, then such investment must be subtracted from the Net Owned Funds.
Conclusion
While it may seem easy to apply for Online NBFC Business Registration, there are tons of legalities you must keep in mind for a seamless registration journey. With that being said, dealing with RBI norms for NBFC establishment can be utterly overwhelming. The journey of a successful registration begins with a compliance drill down followed by subtle handling of paperwork. Any error or negligence can add to your frustration and will eventually lead you to failure.
That’s why we recommend you approach professionally by availing of top-notch assistance from Adviso- a one-stop destination for license-seekers.
