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NBFC Registration Online Procedure
A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 2013 engaged in the business of loans & advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business.
The non-Banking Financial Companies do not possess proper banking licenses like the commercial banks but (after getting NBFC License from RBI) offer a verity of very supportive and helpful services to public depositors borrowers and investors in some selected areas of Business.
An entity desirous of getting NBFC license from RBI must fulfill the following two norms:
- It should be a company incorporated under Companies Act, 2013.
- It should be a company having minimum net owned funds of INR 2 crores.
NBFC Registration Procedure (How to Get NBFC License from RBI?)
NBFC Registration Procedure has been simplified by RBI by providing online platform to applicants. An existing company or a newly incorporated Company under the Companies Act 2013/1956 needs to go through the following Registration process to get a license from RBI
- The applicant company incorporated under the Companies Act 2013 is required to apply online. The application can be submitted online by accessing RBI’s secured website – www.cosmos.rbi.org.in
- The company can download a suitable application form from the above website, key in the data, and upload the application form.
- After filing the online Application the company has to submit the hard copy of the application form (indicating the online Company Application Reference Number, along with the supporting documents, to the concerned Regional Office of RBI.
- The company can then check the status of the application from the above-mentioned secure address, by keying in the acknowledgment number.
- The license will be granted only after vigilant inspection of the application and documents attached with it.
Non-Banking Financial Company (NBFC) licensing Criteria
An entity desirous of securing NBFC license must fulfill the following two criteria :
- It should be a company incorporated under Companies Act, 2013/1956.
- It should be a company having minimum net owned funds of INR 2 Crores
Net Owned Funds’=
Aggregate of the paid-up equity capital, preference shares which are compulsorily convertible into equity, free reserves, balance in share premium account and capital reserves representing surplus arising out of sale proceeds of an asset, excluding reserves created by revaluation of asset, after deducting therefrom accumulated balance of loss, deferred revenue expenditure, and other intangible assets.
Minus
the amount of investments of such company in shares of its subsidiaries, companies in the same group and all other NBFCs and the book value of debentures, bonds, outstanding loans and advances including hire purchase and lease finance made to and deposits with subsidiaries and companies in the same group, to the extent it exceeds 10% of the owned fund.
Documents Required for NBFC Registration
The detailed Checklist of documents for registration of an NBFC (getting license from RBI) are tabled below:-
| Sr. No | Particulars of Documents required for NBFC registration. |
|---|---|
| 1 | Certified copy of Certificate of Incorporation. |
| 2 | Extract of the main object clause in the MOA clearly depicting the financial business. |
| 3 | For companies already in existence, the Audited balance sheet and Profit & Loss account along with directors & auditors report or for the entire period the company is in existence, or for last three years, whichever is less, |
| 4 | Board resolution stating that:
|
| 5 | Copy of Director’s experience certificate in the Financial Services Sector (including Banking Sector). |
| 6 | Bankers report depicting details of deposits and loans balances as on the date of application and the conduct of the account. |
NBFC Registration and Regulations
All activities transactions and working of the NBFCs in India are regulated supervised and controlled by RBI Act 1934 and regulations and provisions as provided in the Chapter III B of RBI Act 1934.
However, in terms of the powers given to the Reserve Bank, to obviate dual regulation, certain categories of NBFCs which are regulated by other regulators are exempted from the requirement of registration with RBI viz.
- Venture Capital Fund/Merchant Banking companies
- Stock broking companies registered with SEBI,
- Insurance Company holding a valid Certificate of Registration issued by IRDA,
- Nidhi companies as notified under Section 620A of the Companies Act, 1956,
- Chit companies as defined in clause (b) of Section 2 of the Chit Funds Act, 1982,
- Housing Finance Companies regulated by National Housing Bank
The Reserve Bank has issued following detailed directions on prudential norms, of NBFCs However applicable regulations vary based on the deposit acceptance or systemic importance of the NBFCs.
- Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007,
- Non-Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015
- Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015.
Further The RBI directions inter alia, prescribe guidelines on
- Income recognition of NBFCs.
- Asset classification and provisioning requirements applicable to NBFCs.
- Exposure norms, disclosures in the balance sheet.
- Requirement of capital adequacy.
- Restrictions on investments in land and building and unquoted shares.
- Loan to value (LTV) ratio for NBFCs predominantly engaged in business of lending against gold jewellery, besides others.
- Statutory liquidity requirements.