Contact No
+91-9465331815
+91-9465331815
Contact Email
cayogeshmehra@gmail.com
cayogeshmehra@gmail.com
Non-banking financial company (NBFC) is a financial institution registered under the Companies act 2013 regulated by RBI. It provides financial services to individuals as well as to the business organization. NBFC does not have a banking license but is allowed to render financial services to customers. It acts as an alternative to the banks as they provide financial solutions to the unorganized part of the society.
Before starting NBFC in India, it is necessary to obtain a license from RBI. As, the Reserve Bank of India (RBI) formulates rules regulations for NBFCs and is authorized to regulate NBFCs by ensuring that they are complying with the prescribed rules regulations.
NBFCs provides various financial services which involve-
Besides this, to continue NBFC License below mentioned conditions must be fulfilled:-
The benefits of NBFC registration are of diverse nature, which are as follows:-
NBFC offers various services such as loan and credit facilities, retirement planning, currency exchange, money market, underwriting, and various related activities.
NBFCs can offer services related to wealth management such as managing portfolios of shares and stocks.
NBFCs can underwrite stock and shares and related liabilities. Also, NBFC provides a hassle-free option to the customers for availing of the quick loan.
NBFCs offers services where banks are not offering. NBFCs are more profitable because of their lower costs and this as a result helps in providing cheaper loans to the customer.
NBFCs serves the benefits of trading in money market instruments.
NBFC performs in such a quick way as it sets the banks apart. It is easier to get a loan from NBFCs as compared to the Banks. As the banks have strict regulations and more paperwork as compared to NBFCs.
Because of the technological advancement, NBFCs are offering multiple choices to reach the larger audience at a quicker step. NBFC covers both the large businessperson and small sectors by providing them multiple choices to avail themselves the credit facilities.
Due to the b regulation and compliance system, it serves the best authenticity and trust among the society.
Under NBFC, up to 100% Foreign Direct Investment is also an amazing benefits of its registration. NBFCs are the largest propellants of initiating finance into the country. Also, the financing process is faster and easier as compared to Banks.
Having specifically built innovative and low-cost business models that are driven by a technology platform and low operating expenses, it is evident that the room for growth is wide-open.
NBFCs is allowed to use SARFAESI law for minimum loan size for debt recovery from the existing level.
Banks usually check the credit score while offering loan facilities. In case of a poor credit score, the bank rejects the loan application. However, NBFCs offers loan to people having less credit score.
For NBFC registration, the below-mentioned conditions must be fulfilled as per Section 45-IA of the RBI Act, 1934:-
Note-100% FDI is allowed from FATF member countries.
Below-mentioned are the Restricted Activities that cannot be performed by the NBFCs:-
In India, NBFCs are classified into two types-
NBFC registration requires a lot of documentation. Here is the list of documents required for NBFC Registration.
The applicant company has to comply with the below-mentioned procedure for getting the Certificate of registration from RBI, which are as follows:-.
A proposed company has to get registered under the Companies Act 2013.
After incorporation, the applicant company needs to apply for online NBFC registration. The application is to submit on RBI's official COSMOS website.
Once the application has been made; an applicant company needs to submit a physical copy of the application to the Regional Office of the Reserve Bank of India along with the necessary documents.
Once the physical copy is arranged by the applicant company, the next step is to log in to the COSMOS and fill in the details of the application online and uploading the same.
Once the COSMOS application is submitted, the applicant company receives a Company Application Reference Number for file submission and future purposes.
Once the applicant company receives CARN, the next step is to submit the physical application form along with the requisite documents to the regional office.
The ROC will scrutinize the application and documents and will then send them to the head office.
Once the application along with the supporting documents is approved by the regional office and everything is found accurate, the RBI issues a Certificate of registration (NBFC License).
Note-However, in case of any discrepancies, the regional office can raise the query and can also reject the application.
Below mentioned are the Penal Provisions in case of non-compliance with RBI Regulations:-
Imprisonment of 1 to 5 years and Fine of Rs. 1 to 5 lakhs
Imprisonment up to3 years
Fine which may extend to Rs. 2000 per offense and in case of continuous non-compliance, an additional fine up to Rs. 100 per day from the first offense.
Imprisonment up to 3 years and a fine of twice the amount received.
Once the process of NBFC registration gets completed, the NBFCs needs to follow the guidelines and instructions issued by the RBI-
On the following below mentioned grounds RBI may cancel NBFC license:-
