slide 2: When NBFC Registration with RBI is
Required
NBFC stands for Non-Banking Financial Company incorporated under Companies Act 2013 and
regulated by Reserve Bank of India. No NBFC is allowed to operate as such without obtaining an
NBFC registration certificate with RBI. NBFCs are engaged to perform financial activities
similar to that of banks. In this blog we have discussed in brief about NBFC and NBFC
Registration with RBI.
Pre-requisite for NBFC Registration with RBI in India
Entity seeks forward to get registered under RBI shall have following requirements fulfilled:
NBFC shall be registered as a Company through MCA under Companies Act 2013
Such Company shall have Net Owned Fund of INR 2 Crore.
NBFCs can accept deposit with a minimum of 12 months and a maximum of 60 months
and no deposit repayable on demand shall be accepted.
NBFCs cannot offer interest rates higher than prescribed by RBI
The Procedure of NBFC Registration with RBI
Once the NBFC is registered as a Company under Companies Act 2013 and has obtained
Certificate of Incorporation shall apply to the regional office of RBI for registration as per the
following steps:
Incorporate the Company either as a private or public company with main objects of
carrying the financial activity.
Prepare a business plan with additional details such as capital induced costing expansion
plan etc.
Apply online to RBI through its official website COSMOS
Fill the application form with necessary details and after the online submission of the
form Application Reference Number is generated which can be used for future reference.
The applicant also needs to submit a hard copy of all the documents to the concerned RBI
authority.
Once the application is completed and submitted application status can be checked using
Application Reference Number
RBI upon receipt of application verifies the same for its correctness and allots the license to
an applicant.
Documents Required for Registration
Updated KYC of directors and signed director’s profile
MOA and AOA
Certificate of Incorporation
PAN of the company
Board resolution for authorization
If any experience in the financial sector supporting documentation of the same
CIBIL score of every director
Banker’s certificate indicating Net Owned Fund which shall not be less than INR 2 Crore
slide 3: Difference between NBFC and Banks
Banks NBFC
Banks provide banking services as a financial
intermediary
NBFC also provides banking service however
needs no bank license
Banks are registered under the Banking
Regulation Act 1949
NBFCs are incorporated under the Companies
Act 2013/1956
Banks accept repayable deposits NBFC cannot accept a deposit that is repaid on
demand
Foreign investment cannot exceed 74 NBFCs can accept deposit up to 100
Banks have to maintain SLR and CRR
mandatorily
No such requirements for NBFCs
Banks provide several customer services such
as overdraft traveler’s cheque etc
NBFCs cannot provide such services to its
customer
Conclusion
NBFCs play a vital role during economy distress by acting as a most vibrant financial system.
NBFCs provide wide financial services including long-term investment and financing services
have gained popularity in the banking sector. Our team Swarit Advisorsof experts will provide
complete assistance for NBFC registration including the coverage of legal and professional
services as well as complete compliances.