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NBFC Incorporation
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NBFC Incorporation

One-stop solution for obtaining NBFC Registration
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    In India, most of the population lives in rural areas where our banking system does not reach. This makes growing businesses and satisfying their financial needs difficult for the people in these areas. This increases the demand for Non-Banking Financial Companies or NBFCs.

    To start a business in the financing field, one can register an NBFC. The business of NBFC includes granting loans and advances, acquisition of shares or bonds issued by the government, leasing & hire-purchase, etc. it cannot provide finance to the business related to industrial activities, agricultural activities, sale or purchase of any goods other than securities, providing any services and sale, purchase or construction of an immovable property.

    Document Required

    Basic Requirements For The NBFC Registration

    For registration of NBFC in India, the basic requirements that need to be fulfilled are:

    The company needs to be registered under the Companies Act, 2013.
    The net worth of the company should be INR 2 Crore.
    The Company should primarily be engaged in financing and lending.
    At least one director should have experience with Indian Bank/NBFC.

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      Steps for NBFC Incorporation

      For NBFC incorporation, it is essential to first register a private company or a public company that complies with the provisions of the Companies Act, 2013. The procedure for NBFC Registration is:

      Firstly, form a Company under the Companies Act, 2013.
      Open a Bank Account.
      Collect all the documents from the directors.
      Prepare a business plan and other allied documents.
      Prepare a detailed application.
      Deposit the amount of INR 2 crores in the bank account of the company.
      Submit the application with the RBI.
      NBFC license is received subject to the background and character evaluation of RBI.

      Required documents for NBFC Registration under Companies Act, 2013

      The documents required for registering the Company under the Companies Act, 2013 are:

      Copy of PAN card of all proposed directors for identity proof
      Bank Statement/Driver’s license/Voter ID of all proposed directors for address proof
      Passport sized photographs of all proposed directors
      Scanned copy of signatures (same as on PAN card) of all proposed directors
      Utility bill/rent agreement/sale deed for address proof of the proposed registered office address

      Required documents for NBFC Registration with RBI

      The following documents will have to be submitted to RBI for NBFC registration:

      Copy of Certificate of Incorporation of the Company that is certified
      Articles and Memorandum of Association of the company that is certified
      Audited balance sheet and profit & loss account for the entire period of the company’s existence or last three years, whichever is less
      Copy of certificate of director’s highest professional/educational qualification
      Detailed profile of each director
      Copy of Experience certificate in the financial services sector of at least one director

      Advantages of NBFC Incorporation

      Getting an NBFC License has the following advantages:

      Advantages of NBFC Incorporation
      It gives the authorization to engage in financing activities all over India.
      It is a legal and registered form of organization.
      As it is legal, it is more reliable.
      It attracts an increased customer base.
      It helps in easy expansion and easy funding for their customers.
      It has a high recognition among the customers.

      In the past, the banks have been the sole financial intermediaries and have accumulated heavy debts. Their lending capacity is declining with each passing day due to an increase in Non-Performing Assets. In these circumstances, NBFCs are marking their presence in the financial market and their demand has seen a rise.

      Lower costs, wider reach, and strong risk management capabilities are the main reasons for the success of NBFCs. It is believed that NBFCs have a better understanding of the market than the banks. Their incorporations have also simplified in recent times. NBFCs have thus a large contribution towards the growth of the economy over the past few years and have a huge scope.


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      Frequently Asked Questions on NBFC Incorporation
      What Is The NBFC Registration Fees?

      For NBFC registration, there’s a requirement of minimum capital of Rs. 2 Crores therefore, an applicant must register a corporation with the prescribed capital alongside the requisite fees asked by the government.

      Which NBFC Is Exempt From The Need For Registration With RBI?

      Not every NBFC is required to be registered under RBI, but they are bound to register with their respective regulators. For instance, Nidhi, National Housing Bank, Chit, Insurance companies also are NBFCs, but they are regulated under different laws and bodies. NBFCs are managed by different financial regulatory organisations of India like RBI, IRDA, SEBI, and Department of Company Affairs. NBFCs deal in various aspects of financing, and thus they are regulated by different financial bodies as per their nature of the activity.

      What Is An NBFC Registration?

      Non-banking financial companies’ aka NBFCs are financial organization dealing with various financial activities. NBFC institutions conduct various financial activities without having any banking license. They are allowed to get involve in financial activities under section 45-IA of the RBI Act and are required to get registered under RBI and obtain a license for operation in India.

      Is NBFC Registration Compulsory?

      NBFCs offer various banking, financial, and non-financial services to people in need. They do not have a banking license, but they follow the principles and regulations set by RBI. The Reserve Bank of India supervises the functions of NBFCs as per the provisions mentioned in Chapter III B of the RBI Act 1934. Only a registered NBFC can commence its operation within the Indian financial market.

      Can NBFC Accept Deposits?

      NBFCs may accept or renew deposit for a minimum time of 12 months. However, an NBFC cannot accept deposit and is not susceptible to issue cheques.

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