NBFC Registration

NBFC REGISTRATION

ABOUT

Non-Banking Financial Company (NBFC) is a financial institution that does not have banking license but is allowed to offer financial products and services to customers. The NBFC Registration comes under the Companies Act 2013 and the RBI Act 1934. In India, The Reserve Bank of India is the supreme regulator of the NBFC.

However, there are various categories in which an NBFC License is categorized into based on the nature of the activity untaken by the organization. They are as under:

  1. Asset Finance Company (AFC)
  2. Investment Company (IC)
  3. Loan Company (LC)
  4. Infrastructure Finance Company (IFC)
  5. Systemically Important Core Investment Company (CIC-ND-SI)
  6. Infrastructure Debt Fund: Non- Banking Financial Company (IDF-NBFC)
  7. Non-Banking Financial Company - Micro Finance Institution (NBFC-MFI)
  8. Non-Banking Financial Company – Factors (NBFC-Factors)
  9. Mortgage Guarantee Companies (MGC)
  10. NBFC- Non-Operative Financial Holding Company (NOFHC)

PRE-REQUIREMENTS FOR NBFC REGISTRATION

  1. Incorporation under Companies Act, 2013 or Companies Act, 1956.
  2. Minimum Net Owned Capital Fund of Rs 2 crore. 
    • paid-up equity capital.
    • Compulsory convertible Preference Shares.
    • free reserves
    • Balance in Share Premium Account
    • Capital Reserves (excluding reserves created by revaluation of asset); after deducting therefrom
    • accumulated balance of loss
    • deferred revenue expenditure
    • other intangible assets
    • NET OWNED FUNDS means:
      • A) The aggregate of the
    B) further reduced by the amounts representing
    • Investment of such company in shares of
      • its subsidiaries
      • companies in the same group
      • all other Non-Banking Financial Companies; and
    • The book value of debentures, bonds, outstanding loans and advances (including hire purchase and lease finance) made to, and deposits with
      • subsidiaries of such company; and
      • companies in the same group
    to the extent such amount exceeds ten percent of (A) above.
  3. There should be atleast 1 director in the company from the same background or a Senior Banker as a full-time director in the Company.
  4. Good CIBIL score is required to present in order to register as NBFC.

REGISTRATION PROCESS

UNDER COMPANIES ACT, 2013

  1. SPICe+ PART A: - Name Reservation
  2. SPICe+ PART B: - Company Incorporation along with the following attachments-

FOR SPICe+

  • Memorandum of Association
  • Articles of Association
  • Declaration by the first director(s) and subscriber(s) (Affidavit not required)
  • Proof of office address
  • Copy of utility bills
  • Copy of certificate of incorporation of foreign body corporate (if any)
  • A resolution passed by promoter company
  • The interest of first director(s) in other entities
  • Consent to act as a Director
  • Proof of identity as well as the residential address of subscribers
  • Proof of identity as well as residential address of the nominee
  • Proof of identity and address of Applicant I, II, III
  • Optional attachments (if any)

For AGILE-PRO

  • Proof of principal place of business
  • Proof of appointment of Authorised Signatory for GSTIN
  • (Either of the documents– Letter of Authorisation/Copy of Resolution passed by BOD/
  • Managing Committee and Acceptance Letter)
  • Proof of identity of Authorised Signatory for the opening of a bank account
  • Proof of address of Authorised Signatory for the opening of a bank account
  • Specimen Signature of Authorised Signatory for EPFO

UNDER RBI ACT, 1934

No Non-banking Financial company can commence or carry on business of a non-banking financial institution without a) obtaining a certificate of registration from the Bank and without having a Net Owned Funds of ₹ 2 Crore.

Process
  1. An Online Application is required to be filed and then physical copy of the application along with necessary documents to be filed with the Regional Office of the RBI.
  2. The application can be submitted online by accessing RBI’s secured website https://cosmos.rbi.org.in.
  3. Once you submit the application form, a CARN (Company Application Reference Number) will be generated.
  4. Thereafter, a Hard copy of the application (CARN to be mentioned) to be sent to the regional branch of the Reserve Bank of India where the registered office of the Company is situated.
  5. After the application is checked and verified, the certificate of Registration is granted to the applicant for the Non-Banking Financial Company.
Documents Required to be submitted along with the Application
  1. Certified Copies of Certificate of Incorporation and Certificate of Commencement of Business in case of public limited companies.
  2. A copy of PAN/Corporate Identity Number (CIN) of the company.
  3. Documents related to the office location/address
  4. Certified copy of the Memorandum of Association (MOA) (Main object clause in the MOA must relate to the financial business) and Articles of Association (AOA).
  5. Copy of the certificate of highest educational and professional qualification in respect of all the directors (self-attested).
  6. Copy of experience certificate, if any, in the Financial Services Sector (including Banking Sector) in respect of all the directors.
  7. CIBIL/credit reports of the Directors of the Company are required.
  8. A copy of the board resolution which certifies that
    • the company has not carried out or stopped NBFC activity and will not carry any until the registration from RBI is granted.
    • the company has not accepted any public deposit, in the past (specify period)/does not hold any public deposit as on the date and will not accept the same in future without the prior approval of Reserve Bank of India
    • the UIBs in the group where the director holds substantial interest or otherwise has not accepted any public deposit in the past /does not hold any public deposit as on the date and will not accept the same in future
    • the company has formulated “Fair Practices Code” as per RBI Guidelines
  9. Certificate issued by the statutory auditor stating that the company is not holding the public deposit and does not accept it as well.
  10. Certificate issued by the statutory auditor stating that the company is not carrying on any NBFC activity.
  11. Certificate specifying owned funds as on the date of the application from the Statutory Auditor is required.
  12. For companies already in existence, the Audited balance sheet and Profit & Loss account along with directors & auditors report or for the entire period the company is in existence, or for last three years, whichever is less, should be submitted.
  13. Information detailing the company’s future plan, generally for the next 3 years, along with the projection of balance sheets, cash flow statement and income statement.
  14. Copy of Fixed Deposit receipt & banker’s certificate of no lien indicating balances in support of Net Owned Funds.
  15. Banker’s report in respect of applicant company, its  group/subsidiary/associate/holding company/related parties, directors of the applicant company having substantial interest in other companies. The Banker’s report should be about the dealings of these entities with these bankers as a depositing entity or a borrowing entity.

(Note: Please provide bankers report from all the bankers of each of these entities and provide the report for all the entities. The details of deposits and loans balances as on the date of application and the conduct of the account should be specified.)

NOTE: THE ABOVE LIST IS INDICATIVE AND NOT EXHAUSTIVE.

INSTRUCTIONS

  1. Application along with enclosures duly completed should be duly filed, page numbered and submitted.
  2. Application should be signed by any of the officials authorised by the Board of Directors.
  3. As per the instructions issued with respect to filing of Form, Application should bear common seal of the company and certified by the Statutory Auditors.

RETURNS TO BE SUBMITTED BY NBFC

A. DEPOSIT TAKING NBFCs

NBS-1  Quarterly Returns on deposits in First Schedule
NBS-2 Quarterly return on Prudential Norms is required to be submitted by NBFC accepting public deposits.
NBS-3 Quarterly return on Liquid Assets by deposit taking NBFC
NBS-4 Annual return of critical parameters by a rejected company holding public deposits. (NBS-5 stands withdrawn as submission of NBS 1 has been made quarterly.)
NBS-6 Monthly return on exposure to capital market by deposit taking NBFC with total assets of ₹ 100 crore and above
Half-yearly ALM return By NBFC holding public deposits of more than ₹ 20 crore or asset size of more than ₹ 100 crore
Audited Balance sheet and Auditor’s
Report		 by NBFC accepting public deposits
Branch Info Return To be submitted by NBFCs accepting/holding public deposits on a quarterly basis.

B. NBFCs-ND-SI

NBS-7 A Quarterly statement of capital funds, risk
weighted assets, risk asset ratio etc., for
NBFC-ND-SI
Monthly Return

On Important Financial Parameters of NBFCs-ND-SI.
ALM returns:
  1. Statement of short-term dynamic liquidity in format ALM [NBS-ALM1]  Monthly,
  2. Statement of structural liquidity in format ALM [NBS-ALM2] Half yearly,
  3. Statement of Interest Rate Sensitivity in format ALM -[NBS-ALM3], Half yearly
Branch Info return

To be submitted by NBFCs-ND-SI on a quarterly basis.