Looking For Registering NBFC?

by CorpSeed Pvt Ltd Environment | Compliance | Finance

What is an NBFC?

To define NBFCs, these are the companies where more than 85% of their consolidated annual gross sales or consolidated assets are financial in nature. NBFCs are the companies which are 'predominantly engaged in financial activity'. Investment banks, mortgage lenders, money market funds, insurance firms, hedge funds, private equity funds, and P2P lenders are examples of NBFCs. Non-banking financial companies (NBFC) are now highly and hugely reputed. Because of their all-round and lavish support to the traders, industrialists, investors and public borrowers, NBFCs are now considered as an excellent and vital complementary to the institutions in the financial and banking sector of India. NBFCs mainly cover industrial and commercial loans, public deposits, investments funds and chit business, leasing, stocks and bonds, insurance business, hire-purchasing and other activities similar to these.

Registration Number

Only after the proper and flawless registration under NBFC category, Reserve bank of India issues the NBFC registration number. It is the identity of the company and is essential for its reliability and tax related calculations. In addition, they provide the legal security to the concerned company. In order to procure the registration number, NBFCs must fulfil the conditions set out for the category under which it is willing to register. NBFC registration is essential for any company doing business in these areas and the total financial flow in its business is increased to more than 50% and is duly registered under the Companies act 2013.

Registration of NBFC

Formation and Incorporation – To register any NBFC, first step would be formation and incorporation of the company. It is essential that the concerned company is a registered company. Either under the Companies act 2013 or 1956.

Minimum Net Owned Capital – It is another requisite necessary for the aspirant company. Net owned fund or capital of 2 crore INR must be possessed by the company. This paid up equity capital must not be preference share capital and shall be equity share capital.

Fresh Bank account – The said minimum paid up equity capital shall be deposited in a fresh deposit account. This account may be maintained in any bank but shall must be free from all liens. In general, these funds shall be maintained in fixed deposit account. Reserve Bank of India verifies the concerned bankers about the deposits of the aspirant company at the time of considering the application. So, while making the application for grant of NBFC registration, the essential net owned funds must be present in that account.

Application for NBFC registration – Initially, the aspirant company will make an application online at the secured website of Reserve Bank of India which would issue an application reference number to the company. Further the company would be required to submit the hard copy of the application made along with reference number in duplicate and other requisite documents like Annexure I, Annexure II and Annexure II and in addition to these, other documents which contains information in relation to incorporation of the company, Memorandum of Association, Articles of Association, documents regarding management and administration of the company, location of the company, income tax, PAN, audited financial accounts etc.

Grant of Registration certificate – The registered application and documents are then scrutinized thoroughly by the regional office of Reserve Bank of India. After critically verifying all the documents and application and finding it satisfying and complete and as per the requirements, the regional office would forward the same to central office of Reserve Bank of India. The central office would then again scrutinize the said application and documents and would forward the same to the applicant along with the grant of NBFC registration certificate. Only if the company is satisfying and complying with the described conditions in Section 45-IA of the Reserve Bank of India Act of 1934.