How to Get NBFC License in India?

by Corpseed Group ***

Getting a Non-Banking Financial Company (NBFC) license in India involves several steps and regulatory requirements. Here is an overview of the process:

Incorporate a company: The first step to getting an NBFC license is to incorporate a company in India. The company should be registered under the Companies Act, 2013, and have a minimum net owned fund (NOF) of Rs. 2 crore.
Apply for registration with the Reserve Bank of India (RBI): The next step is to apply for registration with the Reserve Bank of India (RBI) through its online portal called the "COSMOS" portal. You need to fill the application form and submit it along with the necessary documents.
Submit documents: The documents required for the NBFC license application include the company's incorporation certificate, board resolution, NOF certificate, statutory auditor's certificate, bank statement, and a business plan.
Background check of directors: RBI conducts a background check of the company's directors, which includes their educational qualifications, work experience, and credit history.
Compliance with RBI guidelines: The company must comply with the RBI guidelines for NBFCs, which include maintaining a certain level of capital adequacy, complying with Know Your Customer (KYC) norms, maintaining proper accounting standards, and submitting periodic reports to the RBI.
Inspection by RBI: The RBI may conduct an inspection of the company's books and records to ensure compliance with its guidelines.
Approval of NBFC license: If the RBI is satisfied with the application and the company's compliance with its guidelines, it may grant the NBFC license.

The process of getting an NBFC license can take several months, and it is essential to comply with all the regulatory requirements to avoid any delays or rejections. It is also recommended to seek the advice of a legal or financial expert to ensure that all the necessary documents are in order and the application process is smooth.

How can I register my NBFC?

To register a Non-Banking Financial Company (NBFC) in India, you need to follow the below steps:

Incorporate a Company: The first step in registering an NBFC is to incorporate a company under the Companies Act, 2013, with a minimum net owned fund (NOF) of Rs. 2 crores.
Apply for NBFC Registration: Once the company is incorporated, the next step is to apply for NBFC registration with the Reserve Bank of India (RBI). The application can be made through the RBI's online portal called COSMOS.
Submit the Required Documents: You need to submit the necessary documents with the application, which includes the company's incorporation certificate, board resolution, NOF certificate, statutory auditor's certificate, bank statement, and a business plan.
Pay the Fees: You need to pay the requisite fees for the application, which is currently Rs. 5,000.
Background Check of Directors: The RBI conducts a background check of the company's directors, which includes their educational qualifications, work experience, and credit history.
Comply with RBI Guidelines: The company must comply with the RBI guidelines for NBFCs, which include maintaining a certain level of capital adequacy, complying with Know Your Customer (KYC) norms, maintaining proper accounting standards, and submitting periodic reports to the RBI.
Inspection by RBI: The RBI may conduct an inspection of the company's books and records to ensure compliance with its guidelines.
Approval of NBFC License: If the RBI is satisfied with the application and the company's compliance with its guidelines, it may grant the RBI NBFC license.

The entire process of registering an NBFC can take several months, and it is essential to comply with all the regulatory requirements to avoid any delays or rejections. It is recommended to seek the advice of a legal or financial expert to ensure that all the necessary documents are in order and the application process is smooth.

How much does NBFC license cost?

The cost of obtaining an NBFC (Non-Banking Financial Company) license in India can vary depending on the specific circumstances of the applicant. However, here is a rough estimate of the costs involved in obtaining an NBFC license in India:

Application Fee: The application fee for NBFC registration is currently Rs. 5,000.
Net Owned Fund (NOF): As per the RBI guidelines, an NBFC is required to have a minimum net owned fund (NOF) of Rs. 2 crores. This amount needs to be maintained throughout the operation of the NBFC.
Statutory Audit Fee: An NBFC is required to conduct an annual statutory audit, which involves the examination of the company's financial records and compliance with regulatory guidelines. The cost of statutory audit can vary depending on the size and complexity of the NBFC.
Legal and Professional Fees: An NBFC may need to engage the services of legal and financial professionals to assist with the registration process and compliance with regulatory requirements. The fees for these services can vary depending on the specific needs of the NBFC.

Overall, the cost of obtaining an NBFC license in India can range from a few lakhs to several lakhs of rupees depending on the specific requirements of the applicant. It is essential to factor in all the costs associated with NBFC company registration to ensure that the application process is smooth and successful.

What license are required for NBFC?

To operate an NBFC (Non-Banking Financial Company) in India, you need to obtain the following licenses and registrations:

NBFC Registration with RBI: An NBFC is required to register with the Reserve Bank of India (RBI) under Section 45-IA of the RBI Act, 1934. The registration process involves submitting an application along with the required documents to the RBI.
Permanent Account Number (PAN): The NBFC needs to obtain a Permanent Account Number (PAN) from the Income Tax Department. This is required for tax purposes.
Tax Deduction and Collection Account Number (TAN): The NBFC is also required to obtain a Tax Deduction and Collection Account Number (TAN) from the Income Tax Department. This is required for deducting and remitting tax on payments made by the NBFC.
Goods and Services Tax (GST) Registration: An NBFC is required to register under the Goods and Services Tax (GST) regime. The GST registration is required for collecting and remitting GST on the services provided by the NBFC.
Shops and Establishments Registration: An NBFC is required to obtain a Shops and Establishments Registration from the respective state government. This registration is required for compliance with labor laws and regulations.
Other Registrations: Depending on the nature of the NBFC's operations, it may be required to obtain other registrations and licenses, such as the Securities and Exchange Board of India (SEBI) registration for securities-related activities, Insurance Regulatory and Development Authority (IRDA) registration for insurance-related activities, and so on.

It is important to comply with all the regulatory requirements and obtain the necessary licenses and registrations to ensure that the NBFC operates legally and without any regulatory violations.

Who is eligible for NBFC registration?

To be eligible for NBFC (Non-Banking Financial Company) registration in India, a company must fulfill the following criteria:

Incorporation: The company should be registered as a company under the Companies Act, 2013, or any previous Companies Act.
Minimum Net Owned Fund (NOF): The company should have a minimum net owned fund (NOF) of Rs. 2 crores. The NOF is calculated as the difference between the total assets and total liabilities of the company.
Main Object Clause: The main object clause in the company's Memorandum of Association should state that the company is engaged in the business of providing financial services.
Management: The management of the company should be in the hands of fit and proper persons. The RBI conducts a background check of the company's directors, which includes their educational qualifications, work experience, and credit history.
Compliance with RBI Guidelines: The company should comply with the RBI guidelines for NBFCs, which include maintaining a certain level of capital adequacy, complying with Know Your Customer (KYC) norms, maintaining proper accounting standards, and submitting periodic reports to the RBI.

It is important to note that the RBI has the discretion to grant or reject an NBFC registration application based on its assessment of the company's eligibility criteria and compliance with regulatory guidelines. Therefore, it is advisable to seek the advice of a legal or financial expert to ensure that all the necessary documents and compliance requirements are in order.

NBFC Registration - Types, Process, Fees, Documents

NBFC (Non-Banking Financial Company) is a type of financial institution that provides banking services without holding a banking license. NBFCs are regulated by the Reserve Bank of India (RBI) and require registration to operate legally. Here is an overview of the NBFC registration process, including types, fees, documents required, and the process.

Types of NBFCs:

Asset Finance Company (AFC)
Investment Company (IC)
Loan Company (LC)
Infrastructure Finance Company (IFC)
Systematically Important Core Investment Company (CIC-ND-SI)
Non-Systematically Important Core Investment Company (CIC-ND-NDSI)
Micro Finance Institution (MFI)
Factors
Mortgage Guarantee Companies

NBFC Registration Process:

Apply for Digital Signature Certificate (DSC): NBFC registration requires a digital signature certificate that can be obtained from a certified agency.
Apply for Director Identification Number (DIN): The next step is to obtain a DIN for all the directors of the company from the Ministry of Corporate Affairs.
Company Registration: Register your company as an NBFC with the Ministry of Corporate Affairs.
Apply for NBFC Registration: Apply for NBFC registration with the Reserve Bank of India (RBI) through the online application process.
Submission of documents: After the application is processed, the RBI will require the submission of necessary documents, including KYC (Know Your Customer) documents, MOA (Memorandum of Association), AOA (Articles of Association), and other documents as required.
Verification and Inspection: After the submission of the documents, the RBI will conduct an inspection of the company's books, records, and other necessary documents.
Issue of Registration NBFC Certificate After the inspection, if the RBI is satisfied with the documents and the company's compliance with the regulations, the RBI will issue a registration certificate.

NBFC Registration Fees:

The NBFC registration fees vary depending on the type of NBFC. The following are the fees for different types of NBFCs:

AFC, LC, and IC: Rs. 5 lakh
IFC and CIC-ND-SI: Rs. 2 crore
CIC-ND-NDSI: Rs. 25 lakh
Micro Finance Institution: Rs. 10 lakh
Factors and Mortgage Guarantee Companies: Rs. 15 lakh

Documents required for NBFC Registration:

KYC documents of the directors and shareholders
PAN card and Aadhaar card of the directors and shareholders
MOA and AOA of the company
Bank statements of the company
Board resolution for NBFC registration
Company registration certificate
Net worth certificate of the directors

It is important to note that the RBI NBFC registration process can take several months, and it is essential to comply with all the regulations and requirements of the RBI. It is advisable to seek the assistance of a professional consultant or legal expert to ensure the smooth and timely registration of the NBFC.

Read more This Blog:- What are the license required for NBFC?