Procedure to Get NBFC Registration with RBI

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NBFC the term stands for Non-Banking Financial Companies. From the last few decades, they are playing an important role in Indian financial system by providing, banking facilities to the unbanked segments of the society as per their needs. NBFCs are the companies registered under the Companies Act and involved in the business of providing loans and advances, acquisition of shares/stock/bonds/debentures/securities issued by government or local authority or other marketable securities, leasing, hire-purchase, insurance business, chit business excluding those companies whose main business is of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any sale/ purchase/ construction and services of immovable property. Those companies who are involved, in the business of receiving deposits under any scheme or arrangement in one lump sum or in installments in the way of contributions or in any other manner, then it is also termed as a non-banking financial company (Residuary non-banking company).

Moreover, we can say that their activities are quite similar to the bank however, there are few differences such as: - They cannot accept a deposit, and do not form part of the payment and settlement system because they cannot issue cheques drawn on itself; further, they cannot provide deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation to its depositors, unlike in case of banks.

NBFCs are mainly regulated by RBI, under the framework of Reserve Bank of India Act, 1934. Therefore, before starting working as NBFCs it is mandatory to get itself registered with the RBI. Therefore, the foremost requirement for getting this registration is that the Company should be incorporated under Companies Act and have a minimum net owned fund of Rs two crore and involved in any one of the businesses of NBFCs.

Procedure for getting registered with RBI as described below:

When the applicant company is eligible for NBFC Registration as per criteria described above, then they have to apply online along with the necessary documents. In this mode, the applicant has to submit an application through RBI’s secured website https://cosmos.rbi.org.in. For this purpose, they did not require to log on, therefore, no user id is required. They simply have to click on “CLICK” for Company Registration on the login page of the COSMOS Application. After clicking, the Excel application form is available for download. After downloading the suitable application form (i.e. NBFC or SC/RC) from the above website, key in the data and upload the same again. After that, the applicant will get a Company Application Reference Number, which enables them in knowing the current status of the registration process. Thereafter, the applicant has to submit the same in hard copy (indicating the online Company Application Reference Number), along with the supporting documents, to the concerned Regional Office. After verification, the regional office will send the application along with documents to the central office of RBI for their approval, and if they are satisfied after verification of documents then the NBFC certificate will be issued.

There are Two Categories of NBFC

1. The deposit accepting NBFC: It means those NBFC’S which accept deposit from the public. It includes loan companies, assets finance companies, investment companies etc.

2. Non-Deposit Accepting NBFC: It means those NBFC which only lend, but cannot accept deposit from public other than paying back of borrowed money.

Further on the basis of these two categories, there are different types of NBFC as explained below:

• Asset Finance Company, Investment Company, Loan Company, Infrastructure finance company, Systemically Important Core Investment Company, Infrastructure debt fund, Non-Banking Financial Company-Micro Finance Institution (NBFC-MFI), Non-Banking Financial Company – Factors (NBFC-Factors).
• Further in order to conclude, as nowadays NBFCs has become a good vehicle in providing similar services as of banking to the most part of the society which led to the financial development of the economy. So, if you are thinking to start -up your business as NBFC then, we Enterslice are here to help you in this regard.