A Non-banking Financial Company has become a vital part of our economy nowadays. Through peer to peer lending, this form of business entity facilitates loans to individuals whose demands were previously unmet by conventional financial institutions. Registered under the company’s act, this business entity provides banking facilities like the following:
- Loan facilities
- Accepting deposits
- Hire purchase
- Retirement planning
- Securities trade
- Money market trade
- Merger activities
- Underwriting facilities
The way for them to raise funds is either publicly using directly or indirectly from public or from cooperative or commercial banks. These institutes provide the mentioned services to small scale business, micro scale businesses and individuals as well. Because of the NBFCs accentuation towards providing the most flexible services, the most shortened procedures, increased rates of deposits. This has made the NBFC one of the premier financial institutes in India.
Difference between NBFC and a bank
- Demand deposits are not accepted in NBFC
- NBFC are not the part of payment and settlement system.
- NBFC cannot issue cheque that they draw themselves.
- Deposit insurance facility is not available for the depositors for NBFC.
Now that you know how different an NBFC is from bank, are you ready to start your own?
Registrationwala provides the registration services if you want to start your own Non Banking Financial Company. We are efficient and we are going to make sure that your company starts up as soon as possible.
Documents Required for NBFC Registration
- signed copies of the incorporation certificates of the company
- Signed copies of the memorandum of association.
- Board resolution that states:
- An undertaking that says that the company has never done activities pertaining to NBFC and won’t start it without the registration from RBI
- The bodies that are not incorporated and the director hold a lot of interest over them. These bodies can either be incorporated or:
- The bodies that have not accepted any public deposits yet.
- Does not hold any public deposit
- Will not accept any deposit in future.
- Follow through with the fair practices code setup by the RBI.
- Declaration that the company:
- Has not accepted any public funds in the past and does not hold any public fund as on the current date
- Will not accept any deposit in the future without approval of the RBI.
- Declaration that the company shall seek the RBI’s approval before creating any customer interface.
- Photocopy of the fixed deposit receipt or banker’s certificate
- For the company that are already in existence, the following documents are needed as well:
- Audit balance sheet along with the annexure
- Profit and loss statement
- Auditors Report
- Directors report
- A bankers report of
- The director of the applicant company that have significant interest in other companies
- The applicant company along with the directors of the subsidiaries, associated, holding, and related parties.
- Photocopy of the highest educational certificates that the directors have.
- Photocopy of the experience certificate (this is an optional documents) if you have experience in any facet of the financial centre.
Pre-requisites of NBFC
- You should already be an incorporated company.
- The minimum net owned fund of that company should be INR 2 Crore in case of Indian entity and INR 5 Crore for foreign entity.
- At least one of the directors of the company should have experience in the field of banking and financing.
- The CIBIL record of the company should not have any irregularities.
NBFC Registration Process
- Accumulating the required documents
- Submitting the NBFC application long with these documents.
- After submission, the RBI is going to issue a CARN number to track the status of the application.
- After obtaining CARN, a physical copy of the application also has to be submitted to the branch of RBI.
- After receiving the application, and after some comprehensive scrutiny, you will be granted the license of registration of NBFC.