NBFC Registration
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Non-Banking Financial Company (NBFC) – Simplified Financial Solutions
An NBFC, distinct from traditional banks, extends financial services to individuals and businesses. Unlike banks, an NBFC does not mandate a banking license but requires an NBFC License, functioning comparably to banks by offering financial solutions, particularly to the unorganized segments of society.
Obtaining an NBFC License involves RBI under Section 45-IA of the RBI Act, 1934. Initially, registration as an NBFC under the Companies Act, 2013, or relevant ongoing laws is essential. NBFCs serve as a link between depositors/investors and borrowers.
At Financial Chartered, our team of experts guarantees top-notch assistance, timely delivery, and utmost customer satisfaction throughout the company formation process. Reach out to us at 8890077750 or via email at financialchartered.com@gmail.com for NBFC registration and compliance services.
Advantages of an NBFC License
Distinct Legal Identity
Upon registration, the entity gains legal recognition, separate from its owners, directors, shareholders, and employees.
Limited Liability
Members' liability is confined to their invested capital, shielding them from personal liability for the company's debts.
Reduced Compliance Burden
NBFC registration involves fewer regulations and paperwork compared to obtaining bank licenses, streamlining the process.
Competitive Interest Rates
NBFCs typically offer lower interest rates than banks, making loans more accessible to borrowers.
Simplified Rules
With fewer rules compared to banks, NBFCs facilitate an uncomplicated loan process for borrowers.
Cost Efficiency
Less stringent regulations translate to lower operational costs, resulting in increased profitability compared to banks.
Minimum Requirements for NBFC License
Company incorporation under Companies Act 1956/2013
Minimum Net Owned Funds: Rs. 2 Crore (Tax-paid capital)
Directors with a finance or banking background
Detailed 5-year business plan
Documents Required for NBFC License
Company registration documents (COI, MOA, AOA, PAN Card, GST Certificate)
Directors' details (profiles, income proof, credit rating report, educational and experience certificates)
Company bank account details, board resolutions, action plan, income tax returns
Pre-Conditions for NBFC License
Fulfillment of Section 45-IA requirements, including a good credit rating, full-time directors with finance expertise, and a comprehensive 5-year operational plan.
NBFC License Application Process
Online application submission, generating a Companies Application Reference Number (CARN)
Submission of hard copies to the RBI Regional Office and subsequent verification
Thorough background check by the RBI Central Office
License issuance upon fulfillment of Section 45 IA conditions
Principal Business Activities of an NBFC
NBFCs engage in various financial activities such as lending, investments, insurance, P2P lending, and chit business. Fulfillment of specific conditions is crucial to maintain the NBFC License.
Restricted Activities by NBFC
Certain activities like agriculture, industrial pursuits, purchase/sale of goods or property are restricted for NBFCs.
Conditions Set by RBI for Granting NBFC License
The RBI scrutinizes the financial and operational aspects to ensure the NBFC’s capability to serve investors, not operate against public interest, maintain sound management, possess sufficient capital, and align with RBI policies for licensing approval.
