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NBFC Registration 4999

NBFC Registration

                 What is a NBFC?

A Non Banking Financial Company can be defined as a company registered under the Companies Act, 1956. Majorly engaged in the folowing types of business:

  • Acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature
  • Loans and Advances
  • Hire Purchase
  • Insurance Business
  • Leasing
  • Chit Business

        What is not included under NBFCs?

NBFCs does not include any institution whose principal business is that of:

  • Industrial activity

  • Agriculture activity

  • Providing any services and sale/purchase/construction of immovable property.

  • Purchase or sale of any goods (other than securities)

 

               Classification of NBFCs

It is noteworthy that A non-banking institution which is a company and has a principal business of receiving deposits (under any scheme or arrangement) in one lump sum or in installments by way of contributions or in any other manner, is also a Non Banking Financial Company. Since December 2006 three broad categories of NBFCs exist in India:

  • Investment Companies

  • Loan Companies

  • Finance Companies

             Regulation of NBFCs

Depending on the type of NBFCs registered under Section 3 of the Companies Act 1956 there are regulators as follows:

  • NBFCs Registered with RBI- Regulation, Supervision, Surveillance and Enforcement under RBI

  • NBFCs Regulated by Other Regulators- Find below the Authority for Regulation, Supervision, Surveillance and Enforcement, depending on the type of Financial Institutions:

  • Housing Finance Institutions-National Housing Bank

  • Merchant Banking Company/ Venture Capital Fund Company/ Stock Broking/ Collective Investment Schemes (CIS)-Security and Exchange Board of India

  • Nidhi Companies and Mutual Benefit Companies-Ministry of Corporate Affairs

  • Chit Fund Companies-State Government

  • Insurance Companies-The Insurance Regulatory and Development Authority

  • Non Banking Non Financial Companies- Regulation, Supervision and Surveillance under the Companies Act 1956.

Regulator: Ministry of Corporate Affairs

Enforcement Agency: State Government

        Pre-Requirements for NBFC Registration

In order to obtain a proper and secure registration compulsory requirements are as follows:

  • Applicant company should be registered as per the Rules, Regulations and Provisions given in the Companies act, 2013 or the earlier Companies Act 1956.

  • If a company engaged in the business of any of the above mentioned fields, produces finance flow from that particular business, which is more than 50% of the total capital asset of the company for any year, the NBFC certificate is mandatory.

  • The applicant company should have a paid-up capital fund of INR-2 Crore. In case of a Foreign Company desirous of of setting up an NBFC in India, should have a paid up equity share capital of 5 Crore.
    Note: The Net Owned Fund mentioned above has to be present in Company’s bank account at the time of filing Application.

               Process of Registration

  • An online application is to be made in the prescribed format with information regarding the demanded documents and enclosures, which generates a Company Appliacation Reference Number.

     

  • A hard copy of the above mentioned application along with demanded documents and enclosures to the concerned Regional Office of the RBI.

     

  • After the verification and approval of the submitted application and documents, the regional office sends the application to the Central office of RBI, which goes through crucial examination in order to grant the Certificate.

  • If the terms and conditions under section 45-I A of the RBI Act, 1934 are fully satisfied the Certificate will be granted.

     

    Documents Required for NBFC Registration

Significant documents required for NBFC Registration in India are as follows:

  • Documents related to the administration and management of the company

  • Company Incorporation Certificate

  • The MoA and the AoA of the applicant company or firm

  • Documents describing the location of the company

  • Detailed information about Directors or Partners of the Company

  • Accounts of the company well-audited for last three consecutive years

  • Board Resolution in favour of NBFC formation

  • Bank Account with a minimum paid up equity share capital of INR-2 Crore

  • Income tax PAN, etc.

  • Other relevant documents on request

                 Advantages of NBFCs

NBFCs recently gained a lot of popularity in between institutional investors, because NBFCs provides semi rural and rural India the access to credit, as the traditional banks have been traditionally poor in reaching them. Some advantages are as follows:

  • Provides loans and credit facilities- There are firms opting to take business loan from NBFCs other than Banks due to quicker processing, competitive interest rates, and availability of loans for those with poor credit history.

  • A hard copy of the above mentioned application along with demanded documents and enclosures to the concerned Regional Office of the RBI.

     

  • Supporting investmenst in property- Investing in property with NBFCs is advantageous due to flexible rates, easy repayment, acceptable property collaterals with quick and easy processing

  • Trading money market instruments- Interest rates on money market instruments such as commercial paper id soft with NBFCs, though the base rate of banks stayed unchanged.
  • Funding private education- Flexible rates and easy return makes it convenient.
  • Provides retirement planning
  • Advise companies in merger and acquisition

  • Wealth management such as Managing portfolios of stocks and shares

  • Prepare feasibility, market or industry studies for companies

Frequently Asked Questions on NBFC Registration

1. What are the requirements for the registration of the NBFCs with RBI?

2. What is Net Owned Funds (NOF) of NBFCs at the time of takeover?

3. What is the definition of Net Owned Funds (NOF) of NBFC?

4. Does every NBFC required to be registered with RBI?

5. How NBFCs are different from Banks?

6. Can NBFCs accept deposits?

7. What are the sources of funds for a NBFC?

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Documents Required

Documents for Private Limited Company registration

  1. PAN card- All Directors
  2. ID Proof (Aadhar card/DL/Voter ID) of all Directors
  3. Permanent address Proof (Bank Passbook-front page/Latest utility bill)- All Directors
  4. Address Proof of proposed Registered Office of company
    1. If taken on rent then NOC with the utility bill from the owner
    2. If not taken on rent or owned by any other entity then NOC signed by an owner
    3. If owned by Director then sale deed with an electricity bill
  5. Passport size photograph of all directors
  6. Main objects of the proposed company in detail
  7. Four names of the proposed company as per preference
  8. Significance of names of the proposed company
  9. Shareholding proportion
  10. Signed forms (Format provided)

Process to incorporate a Private Limited Company

The process of Private Limited Company registration involves obtaining the Digital Signature Certificate (DSC) & Director Identification Number (DIN), obtaining approval for name, creating and filing of documents with RoC and filing of an application for PAN & TAN. It takes around 15-20 days to complete all the legal formalities to register a Private Limited Company in India. This time period is subject to the time taken by government authorities to process the application.

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  • Incorporation Done: What's Next?
  • Incorporate A Private Limited Company
  • 5 Things To Know Before Incorporation
  • Comparison Between PLC And LLP
  • Annual Compliances For PLC And LLP

Need Help With Registering A Private Limited Company?

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Key Features Sole Properties
Separate Identity
Limited Liability
Transfer of Ownership
Number of Members 2-200 2- Unlimited 1 2-20 1
Perpetual Existence
Tax Benefits Some Many Some Many Few
Foreign Members
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  • How many people can start a Private Limited Company?

    To incorporate a PLC, there must be at least 2 directors and 2 shareholders. The maximum number of directors in a Private Limited Company is 15 and maximum number of shareholders are 200.

  • How much capital is required to start a Private Company?

    It does not require any minimum amount to be infused as capital. There is no legal requisite to present the proof of capital invested at the time of Private Limited Company registration.

  • What is a Digital Signature Certificate (DSC)?

    A Digital Signature Certificate (DSC) is the digital equivalent (that is electronic format) of physical or paper certificates. Like physical documents are signed manually, electronic documents, for example e-forms are required to be signed digitally using a Digital Signature Certificate.

  • What is Director Identification Number (DIN)?

    A Director Identification Number (DIN) is a unique identification number given to an existing or a potential Director of a company.

  • What is Memorandum of Association (MoA)?

    A Memorandum of Association (MOA) is a legal document prepared in the formation and registration process of a company to define its relationship with shareholders.

  • What is Articles of Association (AoA)?

    The Articles of Association is a document that contains the purpose of the company as well as the duties and responsibilities of its members defined and recorded clearly. It is an important document which needs to be filed with the Registrar of Companies.

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