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NBFC Registration Process in India

NBFC Registration Process in India and Requirements in 2020

A Non-Banking Financial Company (NBFC) provides banking and other lending services without meeting the legal definition of a bank. It is Incorporated under Companies Act, 2013 or Companies Act, 1956 (Old). Every NBFC has to obtain Commencement of business certificate from RBI as defined under Section 45 I(a) of the RBI Act, Read NBFC Regulations. NBFC shall not commence or carry on the business of Non- Banking Financial Institution without obtaining a NBFC License issued by the Reserve Bank of India. NBFC registration or NBFC License can be obtained in 90-120 days.

The principal business of NBFC is providing loans and advances, acquisition of shares, debentures and other stocks issued by Government or other local authorities, insurance business, leasing, hire-purchase, etc. Moreover, any other non-banking institution, incorporated as a company under the Companies Act and having the principal business of receiving deposits under any scheme or arrangement in one lump sum or instalment, is also a non-banking financial company (NBFC).

Requirement for Obtaining NBFC License

To apply and obtain the NBFC License, the following are the basic requirements:

  • A Company Registered in India (Private Limited Company or Limited Company);
  • The company must have a minimum Net Owned Fund of Rs.200 lakhs.

Applying for NBFC License

Submit the application for NBFC License online and offline with the necessary documents to the Regional Office of the Reserve Bank of India. The following are the documents required for NBFC License:

  • Information about the management
  • Certified copies of Certificate of Incorporation and Certificate of Commencement of Business in case of public limited companies.
  • Certified copies of up-to-date Memorandum and Articles of Association of the company. Details of clauses in the memorandum relating to financial business.
  • Copy of PAN/CIN allotted to the company.
  • Directors’ profile, separately filled up and signed by each director.
  • Certificate from the respective NBFC/s where the Directors have gained NBFC experience.
    CIBIL Data pertaining to Directors of the company
  • Financial Statements of the last 2 years of Unincorporated Bodies, if any, in the group where the directors may be holding directorship with/without substantial interest.
  • Board Resolution specifically approving the submission of the application and its contents and authorising signatory.
  • Board Resolution to the effect that the company has not accepted any public deposit, in the past (specify period)/does not hold any public deposit as on the date and will not accept the same in future without the prior approval of Reserve Bank of India in writing.
  • Board resolution stating that the company is not carrying on any NBFC activity/stopped NBFC activity and will not carry on/commence the same before getting registration from RBI.
  • Certified copy of Board Resolution for the formulation of “Fair Practices Code”.
  • Statutory Auditors Certificate certifying that the company is/does not accept/is not holding Public Deposit.
  • Statutory Auditors Certificate certifying that the company is not carrying on any NBFC activity.
  • Statutory Auditors Certificate certifying net owned fund as on date of the application.
  • Details of Authorised Share Capital and the latest shareholding pattern of the company including the percentages.
  • Copy of Fixed Deposit receipt & bankers certificate of no lien indicating balances in support of Net Owned Funds.
  • Details of the bank balances/bank accounts/complete postal address of the branch/bank, loan/credit facilities etc. availed.
  • Last three years Audited balance sheet and Profit & Loss account along with directors & auditors report or for such shorter period as are available (for companies already in existence).
  • Business plan of the company for the next three years giving details of its (a) thrust of business, (b) market segment and (c) projected balance sheets, cash flow statement,
  • asset/income pattern statement without any element of public deposits.
  • Source of the startup capital of the company substantiated with documentary evidence.
  • Self-attested Bank Statement/IT returns etc.

Also, read: Check List for an NBFC Business Model

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Location: India

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