NBFC Registration

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.

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