NBFC License
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NBFC License
A Non-banking financial company (NBFC) is a type of financial institution which aids financial services to the individuals as well as to the business organizations. They function more or similar to that of the banks but both of them are different and registering a NBFC doesn’t necessitate banking license but such Company owns a NBFC License. NBFCs can be considered as an alternative to the banks as they also provide financial solutions to the unorganized part of the society.
NBFC License can be taken from RBI under Section 45-IA of the RBI Act, 1934. In order to obtain the NBFC License one must first have registered as a NBFC under Companies Act, 2013 or any other law for the time being in force. NBFC’s creates a link between the depositors or investors with the borrowers.
Firm Registration has team of experts providing you the best assistance, timely delivery and guaranteeing the highest customer satisfaction with respect to Company formation process.You may get in touch with our team on call or email info@firmregistration.in for NBFC registration and NBFC Compliance services.
Advantages of NBFC License
Minimum Requirements
- Company Incorporated under Companies Act 1956 / 2013
- Minimum Net Owned Funds : Rs. 2 Crore (Capital must be tax paid)
- Profile of the Directors Should be from Finance or Banking
- Capable Business Plan for 5 years
Documents Required for Incorporation
Company Registration Documents
Complete Set of Documents of the Company i.e. COI, MOA, AOA, PAN Card, GST Certificate, if any.
Documents / Details of Directors and Members
Brief Profile, Income proof, Credit rating report, Net-worth Certificate, Educational Qualification Certificates
Documents of Company
Bank Account Details stating the minimum NOF requirement, Banker’s Report confirming that No Lien is remark on the Initial Fixed Deposit.
Process of Incorporation of Nidhi Company
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Principal Business of a NBFC
Despite of this, any of the following conditions must also be fulfilled in order to continue NBFC License:
- Total Assets comprises more than 50% financial assets
- More than 50% of the gross income should be generated from financial assets
Restricted Activities by NBFC
Conditions by RBI for granting NBFC License
- That the NBFC should be able to pay its present as well as/or future investors in full as and when their claims accrue;
- That the operations should not be carried in any manner detrimental to the interest of any of its existing or future investors;
- The management and the Board general character shall not be prejudicial to the interest of the public or its depositors;
- It has sufficient capital structure and earning potential;
- Public interest shall be served by licensing as an NBFC;
- The grant of CoR shall not be unfavorable to the operation of the financial sector. And is consistent with monetary stability, economic growth and considering such other relevant policies of RBI.
FAQs on Startup India Registration
All types of NBFCs are not allowed to accept public deposits. Only the NBFCs whom a specific permission is granted by the RBI can do so and are allowed to accept/hold public deposits.
- Assets Finance Company: The principal activity is to finance real and physical assets
- Loan Company: The principal activity is to provide loans and advances for working capital.
- Investment Company: The principal activity is to acquire shares and securities of other companies
- Core Investment Company (CIC) NBFC-CIC-ND: The main activity of this type of company is to invest in shares, securities and loans in other Group Corporates.
- Infrastructure Finance Company: The principal activity is to provide infrastructure loans.
- Infrastructure Debt Finance Company (IDF) NBFC-ND: The main activity is to provide long term debt in Infrastructure Projects.
- Micro Finance Institutions NBFC-MFI-ND: This type of NBFC is finance to lower Income groups in the form of loans and advances.
- Mortgage Guarantee Company: This type of NBFC is involved in the business of mortgaged guarantee.
You need to file certain forms with ROC and RBI such as :
- Filing on online portal of RBI
- ROC Filings such as Filing of Financial Statements, Annual Accounts
- Filing of ITR and GST Returns
- Maintaining 50:50 PBC Criteria
- Adopt the norms as prescribed by RBI
The minimum of 1/3 or ¼ directors should be from banking/finance background in NBFC
Any business willing to commence activities of non-banking financial nature as defined under Section 45-IA of the RBI Act, 1934 should comply with:
- It should be a company incorporated u/s 3 of the Companies Act, 1956 or 2013,
- It should have a minimum NOF of Rs. 2 crore. (The minimum NOF requirement for specialized NBFCs like NBFC-MFIs, NBFC-Factors, and CICs differs).
RBI has prescribed an interest rate of 12.5% that NBFC can pay on the deposits.
The license is valid for lifetime and can be cancelled on non-compliance of the law.
If you want to give loans to outsiders, you need to apply for NBFC license. You can also go for Nidhi Company Registration for accepting deposits and granting loans to the members of the company.