Opening a Medical Financing NBFC is a Profitable Idea?

Medical financing NBFC is a flourishing business in India due to its rapidly developing healthcare system. The COVID-19 crisis has also simulated both central and state governments to act on strengthening the healthcare network in India. 

However, the cost of getting medical assistance for any fatal disease or accidental injuries remains high, especially in private hospitals. This has led the government to nudge new Non-Banking Financial Companies (NBFCs) on providing easy emergency loans to relatives of patients for costly treatments. This is also termed a medical loan which is available as emergency monetary help for families. Let’s understand Medical financing, how to set up a medical financing NBFC in India, and its future scope in the following sections.  

What is Medical Financing?

This is an emergency loan provided under the category of personal loan for use in health contingency or situations requiring urgent medical assistance for the operation, therapy, surgery, or other health issues. 

How It Is Profitable to Open New Medical Financing NBFC?

The Government of India is focussing on accelerating the development of the healthcare sector since the COVID-19 crisis has arrived in the country. The government is trying to make the facility of availing medical loans easy and hence, allowing many NBFCs to give emergency medical loans on reasonable interest rates.

The Indian Healthcare market is enormous and that is why the scope for forming a new NBFC specializing in giving medical loans is quite promising. Therefore, many new companies are looking to register themselves as NBFCs to establish their place in the market as leading medical loan providers and take advantage of the current situations where the country is looking to boost the healthcare sector.

The eligibility criteria to avail of a medical loan is stated as follows:

• The borrower should be above 18 years of age and can enter a legal contract with the NBFC under Indian Contract Act for grant of Loan.
• He/she should be an Indian citizen and residing in India.
• The borrower must possess a valid bank account, PAN number, and an Aadhar Card.

Documents Required for Medical Loan

• ID Proof (Could be Aadhar Card, Voter ID Card, Passport or Driving License)
• Copy of PAN Card
• Passport Size Photos 
• Address Proof (Bank Statement, Telephone bill, Mobile Bill, and Electricity Bill)
• Self Employed Person needs to submit the previous year bank statement and Income Tax Returns (ITR) for the previous two years
• Salaried Employees need to submit bank statements of the previous three months of the salary account or Form 16/ Salary Slips of the last three months.

MUDS Management Consultancy Firm helps new businesses in registering as a Medical Financing Company or a medical loan NBFC and gives complete guidance to new business starters on the procedure of starting a medical financing NBFC.

Read on to understand how to start a new Medical Financing Company in India and how MUDS Management Consulting can help you throughout the process of registration. 

Read Also: Pros and Cons of NBFC Business in India

Procedure to Start Medical Finance NBFC in India

Documents Required for Registration as a New NBFC:

• ID Proof (Could be Aadhar Card, Voter ID Card, Passport or Driving License)
• Copy of PAN Card
• Passport Size Photos 
• Address Proof (Bank Statement, Telephone bill, Mobile Bill, and Electricity Bill)
• Ownership Documents or Rent Agreement for office space
• Electricity bill
• Certified Copy of Certificate of Registration
• A copy of Fixed Deposit receipt and bankers’ certificate of lien indicating balances in support of Net Owned Funds.
• Bankers Report for Applicant Company/ group companies
• Certified copy of an extract of the main object clause in the MOA (Memorandum of Association) relating to the financial business.
• Certified Copy of the Board resolution
• No Objection Certificate from the owner for rented property
• CIBIL records of all shareholder (more than 10% share in Company) and directors
• Education & Experience proof of promotors
• Net worth certificate of directors and shareholders

Now, let’s understand the procedure of starting a new NBFC in a step-by-step manner.

1. Register Your NBFC Under the Companies Act, 2013. Start by NBFC Registration as a public or private company with the government.
2. Raise Authorized Paid-up Capital of Up to Two Crores: The company must raise an authorized and paid-up capital of about 2 crores to meet the required standards of registration.
3. Depositing the Sum in Bank and Getting Certificate: After raising this sum the company is required to open a fixed deposit account in a bank and deposit the money. After this, they must obtain a Certificate of no lien from the bank to move forward with the process of registration. 
4. Getting All the Certified Copies to Complete the Checklist of RBI Registration
5. Fill Online Application: Once you have all the documents ready for registration, fill the online application form for NBFC registration. After filling the form, the company will get an autogenerated Company Application Reference Number or CARN which will be used as a reference number in all further communication with RBI. 
6. Submit the Hard Copy of Application to RBI’s Regional Office: After filling the online application form and getting the CARN for your company, the physical copies of all the necessary and supporting documents must be compiled with the application form and should be submitted to the regional RBI Office to complete the process of registration.

How Muds Management Assists in Registration of New NBFCs?

Now, it is understood from the above sections that any new company trying to enter the business of medical financing must start by registering itself as an NBFC with the RBI. The process for the same is outlined in the above sections. However, this process could become cumbersome and time taking for founders of the new NBFCs, and therefore, taking assistance from MUDS management helps them in saving time in the NBFC registration process.

Already one of the best management consulting service providers, MUDS Management has worked with top NBFCs in India to streamline the process of their registration and other legal formalities. With the experience of assisting many clients in legal and regulatory services across different domains, you can rely on MUDS Management to get the best services for your business. You can reach out to MUDS Management Consulting for assistance on new NBFCs registration by contacting them on +91 9599653306 or by email at [email protected].