NBFC Registration

Rs.5,85,000/- + govt. fees



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The non-banking financial institution/company is a company which is involved in the principal business to provide loans and advances, working capital loans, Personal loans, Investment in shares, debentures and other stocks issued by Government or other local authorities, insurance business, leasing, hire-purchase or offering Market Place Lending (P2P) Platform.

Business Activities does not include: Agricultural activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services, sale/ purchase/ construction of immovable property, etc.

NBFC REGISTRATION PROCESS

  • Form a company with Minimum Net Owned Fund of INR 2 crore (Equity Share Capital & not Preference Share Capital)
  • Open a Bank Account (Keep entire sum of INR 2 crores in a bank’s deposit account which is free from all liens)
  • Apply Online for Certificate of Registration to RBI
  • Submit documents to the Regional Office of RBI (Refer to ‘Documents Checklist’ in Requirements 1 section)
  • Certificate is Granted!

Advantages of NBFC Registration

- Fresh NBFC Registration can be completed in a period of 90 to 120 days with about 90 % to 95% Success ratio at overall in our experience. At the other side, NBFC Takeover takes 5 months to 12 months period. In case you are a foreigner after Nod from Department of Non-Banking supervision again you need to apply for permission before the Foreign Exchange department of RBI, which again may take minimum 3 months’ time. At overall acquiring an NBFC by foreigner takes 12-15 months’ time and acquisition by Indian Shareholders may take about to 5 to 9 Months. In our experience, only 30% Takeover Deal was successful in past 5 years.
- There is no title risk of Ownership after New NBFC Registration as you are the 1st shareholder of the company at another side in acquiring an existing NBFC, you will not able to establish the clear title of shares. As in 80% NBFC takeover case, we have experienced that target company has no documentary evidence about the transfer of ownership. Merely equity shares were transferred to ROC Records. The Share transfer deed has not been executed.
- There are no assets held by newly incorporated company hence there is no short term or long term gain but at another side, if you are acquiring existing NBFC, you need to prepare for future Capital gain liability, Penalty from Registrar of companies etc.
– In the case of fresh NBFC License application, you may need to block your Rs. 2 Cr / Rs. 20 Million FD in Bank Account and definitely you will earn some amount of interest in it. At another side, in a case of the takeover, the proposed shareholders are required to submit the Bankers report stating the Bank Balance equivalent to book value of the shares.

Documents Required for NBFC

  • Certificate of Incorporation (Certified Copy Issued by ROC)
  • Extract of Main Object Clause in MOA (Clearly depicting Financial Business)
  • Board Resolution stating the following before getting registration from RBI:
    1. Adherence to the “Fair Practices Code (As per RBI Guidelines)
    2. Non-carrying out any NBFC activity
    3. Non-carrying out of acceptance of any public deposit
  • Audited Balance Sheet & Profit & Loss account along with directors and auditors report (for entire period of company’s existence or last 3 years, whichever is less)
  • Director’s Highest Educational & Professional Qualification (Copy of certificate)
  • Director’s experience in Financial Services Sector, including Banking Sector (Copy of certificate)
  • Details of deposits & loans balances as on date of application & conduct of account (Bankers report)
  • Bank Account with a minimum paid up equity share capital of INR-2 Crore
  • Income tax PAN, etc.
  • Other relevant documents on request

FAQ’s

Yes. NBFCs are the companies registered under the Companies Act, 2013 and after company registration, You need to obtained Certificate of registration or NBFC License from the reserve bank of India.

Yes. NBFCs are the companies registered under the Companies Act, 2013 and after company registration, You need to obtained Certificate of registration or NBFC License from the reserve bank of India.

Only those NBFCs which have been granted a license depicting their eligibility to accept deposits from the public shall proceed for the same. However, such deposits are not demanded deposits.

The Reserve Bank of India (RBI) controls the working of all NBFCs under the framework of RBI Act, 1934 and directions issued by it from time to time. Therefore, every NBFC, to carry out its operations, is required to obtain NBFC license from the Reserve Bank of India to commence its business.

The addition of paid-up equity share capital and free reserves as per the latest balance sheet of the company and deducting the following items from it:

  • Accumulated losses;
  • Deferred Revenue expenditures;
  • Other intangible assets;

Investment of such NBFCs in its subsidiaries, same group companies, and other NBFCs; the book value exceeding 10% of the amount calculated in (1) above, of debentures, bonds, outstanding loans and advances (including hire-purchase and lease finance) made to, and deposits with its subsidiaries or companies within the same group

There is no limitation on FDI in NBFC, but FDI must be in the form of T1 Equity. If you bring FDI at the initial stage of registration, you need to comply with FEMA Provisions along with the RBI Act.