Non-Banking Financial Company Incorporation
NBFC or Non-Banking Financial Company is that kind of financial institution which provides various financial and non-financial services to individuals, business enterprises, entrepreneurs, etc. They are different from the Cooperative and Commercial Banks, They do not need to hold a banking license but must strictly follow the rules and regulations provided by RBI from time to time.
NBFCs are the bridges that link the investors or depositors with the borrowers. They have become a better alternative to the banking and financial sector by providing financial solutions to the unbanked and unorganised segments of society.
Get your NBFC company registered in the fastest possible manner.
It usually takes 7 to 10 working days.
- Name approval in RUN
- Digital Signature Tokens
- Filing of Forms
- Issue of Incorporation Certificate along with PAN and TAN
- Includes Govt Fees & Stamp duty for Authorised Capital upto Rs. 1 Lakh except for the states of Punjab, Madhya Pradesh and Kerala
- Body Corporate as director or business needing RBI/SEBI approval
- Assistance in Opening Bank Account
- Businesses looking to expand or scale operations on higher level
- Businesses aiming to work globally or with reputed clients
- Businesses looking to expand or scale their operations
Name approval form filing
Preparation of Incorporation Documents
Getting those docs signed by the respective stakeholders
Filing of e-Forms with ROC
Receipt of Incorporation Certificate with PAN, TAN, GST, EPF, ESI & Bank Account.
Name, Contact Number and Email Id of all the Stakeholders.
Directors Identification Number, if already.
Self Attested PAN, Aadhar & Passport size photo of all the Stakeholders.
Apostilled Passport, Mobile Bill and other KYC docs in case of NRI Stakeholder.
Latest Month Personal Bank statement of all the Stakeholders.
Specimen Signatures of all Stakeholders.
Few Proposed Business Names along with Objects.
Latest Electricity Bill/Landline Bill of Registered Office.
NOC from owner of registered office. (If Owned)
Rent Agreement from Landlord. (If Rented/Leased)
Brief description of main business activities of the proposed Company.
Shareholding pattern (50:50 or 60:40) between the Stakeholders.
Authorised & Paid Up Share Capital of the Company.
How to Apply Online for NBFC Registration with RBI?
The Reserve Bank of India (RBI) formulates rules & regulations for NBFCs, therefore, a license from RBI is required for starting NBFC in India as per Section 45-IA of the RBI Act, 1934.
Mandatory Requirements for eligibility
- Total Assets comprises more than 50% financial assets
- More than 50% of the gross income should be generated from financial assets
Pre-requisite for NBFC Registration
For NBFC registration, below mentioned conditions must be fulfilled as per Section 45-IA of the RBI Act, 1934.
Documents required for the NBFC Registration
The checklist must be completed for the NBFC Registration:
1. COI (Certificate of Incorporation)
2. MOA (Memorandum of Association
3. AOA (Article of Association.
4. Net Worth Certificate of All Directors.
5. Net Worth Certificate of All Shareholders.
6. Net Worth Certificate of Company
7. Educational qualification documents of proposed Directors
8. Directors & Shareholders Detailed business Profile
9. Credit report of directors (Must not contain any write off or Loan Defaults).
10. Credit report of shareholders (Should have a good Cibil Score)
11. KYC details of All Directors & Shareholders.
12. PAN of the Company.
13. GST Certificate.
14. Complete GST Filing History.
15. Address proof of the company (Electricity Bill & Rent Agreement)
16. Bank account details of the company [Rs. 2 Cr must have deposited as NOF]
17. The audited balance sheet of the last 3 years or from the date of incorporation
18. Income tax Returns (of the last 3 years or from the date of incorporation).
19. Format of board resolution regarding NBFC registration Underwriting model.
20. Detailed action plan of next 5 years.
21. Project & Draft Facility for Following Norms:
a. Fair Practice Code
b. Risk assessment policy.
c. Business Structure,
d. Loan Structure
e. IT Policy
What is the procedure for NBFC Registration?
Note- Hiring an experienced NBFC registration consultant who having minimum of 10 years’ experience aids the steps in this process.
Step 1. Register a Private Limited or Public company
Step 2. Obtain a certificate of Incorporation from Registrar of Companies
Step 3. Deposit Net Owned Funds in a bank account opened for company
Step 4. Documentation for obtaining NBFC license
Step 5. Drafting of Business Plan for the next 5 years consisting:
Step 6. Apply for registration with RBI under RBI Act, 1934.
It usually takes around 6 months for the licence to be issued if all the criteria are fulfilled. The entire process can be made hassle-free if you receive support from the right people. Contact us to receive the correct support
Types of NBFC:
NBFCs have been broadly classified on the following basis:
- The deposit accepting NBFCs and
- Non-Deposit accepting NBFCs,
- systemically important (NBFC-NDSI) and
(Non-deposit taking NBFCs are classified further as per their size:)
- Mortgage Guarantee Companies
- Investment Credit Company
- Infrastructure Debt Fund
- Micro Finance Institution
- Non-Operative Financial Holding Company
- Systemically Important Core Investment Company
Application for an NBFC License can be made in any of the following categories:
- Non-Banking Financial Companies – Factors (NBFC-Factors): These are NBFCs that have factoring as their principal business activity. Factoring is a financial transaction. A kind of debtor finance in which an entity can sell its invoice or bills (accounts receivables) to a third party (NBFC-Factor) at a discount. It is also commonly known as bill discounting or invoice financing.
- Non-Banking Financial Companies – Mortgage Guarantee Companies (NBFC-MGC):NBFC-MGC must be registered with RBI as a Mortgage Guarantee Company. Its principal business is that of granting a mortgage guarantee. This guarantee is provided for repaying an outstanding housing loan and interest accrued on it. Up to the guaranteed amount to a creditor institution, when a trigger event happens. The minimum NOF requirement and financial asset criteria are different for this kind of NBFC.
- Non-Banking Financial Companies – Investment Credit Companies (NBFC-ICC):Any financial organization carrying on as its primary business- asset finance, the finance is provided by loans/advances or otherwise, for any activity other than its own and acquiring securities. And its activities must not fall under some other category defined by RBI.
- Non-Banking Financial Companies – Infrastructure Finance Companies (NBFC-IFC): These types of Companies invest in the debt securities of infrastructure companies or public-private partnership projects, having minimum NOF of Rs. 300 crore. The principal business and rating requirements are also different for such NBFCs.
- Non-Banking Financial Companies – Micro Finance Institution (NBFC-MFI): A non-deposit taking NBFC lending on a short-term basis to low-income groups in India, with at least 85% of its assets such as qualifying assets satisfying a few conditions:
- the loan provided to a borrower with a Rural Household Annual Income less than Rs. 60,000, or Urban and Semi-Urban Household Income of not over Rs. 1,20,000.
- the amount of lending does not exceed Rs. 35,000 in the first cycle and Rs. 50,000 in all subsequent cycles.
- the total obligation of the borrower doesn’t exceed Rs. 50,000.
- if the amount is more than Rs. 15,000, a loan term of at least 24 months, with prepayment without penalty,
- loan to be extended without any mortgage,
- the aggregate of loans provided for income generation must not be less than 75% of the total loans given by the MFI,
- the frequency of repayment, whether weekly, fortnightly or monthly instalments, to be selected by the borrower.
- Non-Banking Financial Companies – Non-Operative Financial Holding Company (NBFC-NOFHC): Non-Banking Financial Companies – Systemically Important Core Investment Company (NBFC-SI-CIC): These NBFCs obtain shares, stocks, and securities. The transactions must fulfil the below conditions: The financial organization through which promoter or promoter groups will be permitted to set up a new bank. It is a wholly-owned NOFHC that shall hold the bank as well as all other companies involved in financial services, regulated by RBI or other regulators, to the extent permissible under the applicable regulatory prescriptions.
- Non-Banking Financial Companies – Systemically Important Core Investment Company (NBFC-SI-CIC): These NBFCs obtain shares, stocks, and securities. The transactions must fulfil the below conditions:
- it holds at least 90% of its Total Assets as investment in equity or preference shares, and debt/loans in group companies,
- its investments in the equity stock/shares (including instruments that are convertible into equity shares within a period of not more than 10-years from the date of issue, in group companies, form not less than 60% of its Total Assets,
- it does not trade in its investments in stocks, debt or loans in group companies except by the way of block sale for dilution or disinvestment,
- no financial activity, which is listed u/s 45-I(c) & 45-I(f) of the RBI Act, is being carried out by it. Other than for investments in bank deposits, government securities, money market instruments, loans to and investments in debt issuances of group companies or guarantees declared on behalf of group companies,
- its asset size is Rs. 100 crore or above,
- it accepts public funds.
Pre-Conditions of NBFC Registration
According to Section 45-IA of RBI, below conditions must be fulfilled for a company to be registered as an NBFC: