Freezing of Folios of physical shareholders... Last date for KYC is 30th September 2023... Act now Ref: SEBI Circular SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2023/37

Asset Finance Company Registration
  • Home
  • Asset Finance Company Registration

Asset Finance Company Registration

Asset Finance Company Registration

Assets Finance Company (AFC) is a for profit business company that finances the physical assets like machinery, automobiles, and cars. However, in order to succeed with asset finance company registration, prior registration with the Reserve Bank of India is required. The Reserve Bank of India has the power to impose a fine or penalty, or even can prosecute a company in a court of law, if the company is found doing business without registration. The AFC is also known as a non-banking financial institution (NBFC). Thus, its registration follows similar process as for NBFC Registration.

What is an Asset Finance Company?

An Asset Finance Company, as per the Reserve Bank of India, is a financial institution which does its principal business by financing of physical assets, and supports economic or productive activity relating to automobiles, generator sets, earth moving, tractors, machines, and material handling equipment as well as general purpose industrial machines.

For the above purpose, the principal business is defined as physical assets which supports economic activity, and in this business, the income should not be less than 60% of the total assets and total income respectively.

Pre-Requisites of Asset Finance Company Registration

If you are interested to incorporate your Private Limited Company for NBFC registration; as a prerequisite, you should have at least two persons to begin with.

The minimum documents which would be required for your Asset Finance Company Registration are as below:

  • Copy of PAN Card
  • ID Proof (any one of Aadhaar Card, Driving License, Passport, Voter ID)
  • Address Proof (any one of Bank Statement, Mobile Bill, Telephone Bill, electricity bill)
  • Passport size photo

Also See, Registering a Core Investment Company

Besides, the following documents are required for registration of the registered office:

  • Ownership documents or rent agreement
  • Electricity bill
  • Copy of No Objection Certificate (NOC) issued by the owner.
asset finance company registration process

Process of Asset Finance Company Registration

In India, the procedure of an Asset Finance Company registration is complex. The entire process of an AFC registration takes months as it needs the permission of the Reserve Bank of India. However, the license of is so important that waiting for that much of time worth doing it.

Let us understand the procedure of Asset Finance Company registration:

  • Step #1: Company Registration
    The very first step is to register your company in India. It can be private or public. The nature of the company depends on the choice of promoters. In the beginning, the AFC may be registered for any amount of capital.
  • Step #2: Raise Authorized and Paid-up Share Capital to Rupees Two Crores
    The second step is to raise the authorized as well as paid-up share capital up to two crores rupees. One could do it in the very first step. However, as there is a risk of rejection, it is advised to do it only after incorporation.
  • Step #3: Obtain Certificate by Depositing Rupees Two Crore in Fixed Deposit
    In the third step, the sum of Rs.2 crore should be put in the bank as fixed deposit and a certificate of no lien is obtained from the bank.
  • Step #4: Get the Certified Copies, and Complete the Checklist for RBI Registration
    The following documents are required—
    • Certified copy of the Certificate of Registration
    • Certified copy of the extract of the main object clause of the MOA on the financial business.
    • Certified copy of the Board’s resolution
    • A copy of the receipt of the Fixed Deposit & banker’s certificate of lien which shows balances to support Net Owned Funds.
    • Bankers Report on the Applicant Company/ group companies.
    • CIBIL records of all shareholder (more than 10% share in Company) and directors
    • Education & Experience proof of promoters
  • Step #5: Fill online application
    An online application needs to be filed with the RBI. After the filing, the company would get a Company Application Reference Number.
  • Step #6: Submit the Hard Copy to RBI’s Regional Office
    In this last stage, the hard copy along with all the required documents needs to be submitted to the regional office of the RBI.

How Muds Management Assist in Registering an Asset Finance Company?

While running an asset finance business calls for registering it with RBI prior to commence its operations. Check this to view the list of Asset finance companies listed with the Reserve Bank of India. Muds Management can help you all the above steps one has to go through for that are necessary

Muds Management is actively engaged in asset finance company registration. Reach out to us for assistance! We can help you in all aspects including documentation, connection, and facilitation. Feel free to contact us at +91 7011198909 anytime.