What is NBFC Registration?

As defined under Section 45 I (a) of the RBI Act, 1934, a company can only register itself as NBFC if it is already incorporated and has a minimum net owned fund of Rs. 2 crores.

NBFC Majorly engaged in following types of Business:

• Acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature
• Loans and Advances
• Hire Purchase
• Insurance Business
• Leasing
• Chit Business

The steps for NBFC registration are as follows:

• The applicant's company must have the incorporation certificate under the Companies Act, 2013 or the Companies Act, 1956. The applicant needs to first obtain the company registration either as Private or Public Limited Company.
• Apply for online registration on COSMOS on website of RBI should be filled and submitted along with the requisite documents.and CARN Number will be generated
• The minimum net owned funds of the Company should be Rs. 2 Crore.
• There should be a minimum of 1 Director from the same background or a Senior Banker as a full-time director in the Company.
• The CIBIL records of the Company should be clean
• A Hard copy of the application also has to be sent to the regional branch of the Reserve Bank of India.
• After the application is properly scrutinized, the License will be given to the Company.

What are the guidelines that an NBFC must follow?

The Company once it gets it license has to adhere to the following guidelines:

• They cannot receive deposits which are payable on demand.
• The public Deposits which the company can take should be for a minimum time period of 12 months and a maximum time period of 60 months.
• The interest charged by the Company cannot be more than the ceiling prescribed by the Reserve Bank of India.
• The repayment of any amount so taken by the Company will not be guaranteed by the Reserve Bank of India.
• All the information about the company as well as any change in the composition of the Company has to be furnished to the Reserve Bank of India.
• The deposits taken by the Public will be unsecured.
• The Company has to submit its audited balance sheet every year.
• A statutory return on the deposits taken by the company has to be furnished in the form NBS – 1 every year.
• A Quarterly Return on the liquid assets of the company has to be furnished.
• A certificate from the auditors had to be taken stating that the company is in a position to pay back all the deposits or money taken from the Public.
• A half-yearly ALM return has to be given by the company which has a Public Deposit of Rs. 20 Crore and above or has assets worth Rs. 100 Crore and above.
• The credit rating has to be taken every 6 months and submitted to the RBI.
• A minimum level of 15% of the Public Deposits has to be maintained by the Company in Liquid Assets.

Documents required for registration of NBFC Company

• Company Incorporation Certificate
• The MoA and the AoA of the applicant company or firm
• Documents describing the location of the company
• Detailed information about Directors or Partners of the Company
• Accounts of the company well-audited for last three consecutive years
• Board Resolution in favour of NBFC formation
• Bank Account with a minimum paid up equity share capital of INR-2 Crore
• Income tax PAN, etc.
• Other relevant documents on request