NBFC India – Incorporation, Acquisition & Compliance

Non-Banking Financial Company (NBFC)- India for financing business.

Non-Banking Financial Company (NBFC)- India for financing business.

NBFCs are usefully for

  • Fintech Firms
  • Digital Lending
  • The business of loans and advances
  • Finance Leasing
  • Hire-Purchase
  • Others

Top categorize of NBFC

  • Asset Finance Company (AFC)
  • Loan Company (LC)
  • Infrastructure Finance Company (IFC)
  • Investment Company (IC)
  • Infrastructure Debt Fund: Non- Banking Financial Company (IDF-NBFC)
  • Systemically Important Core Investment Company (CIC-ND-SI)
  • Non-Banking Financial Company-Micro Finance Institution (NBFC-MFI)
  • Non-Banking Financial Company – Factors (NBFC-Factors)
  • Mortgage Guarantee Companies (MGC)
  • Non-Operative Financial Holding Company (NOFHC)

How to incorporate an NBFC in India?

  1. A company should first be registered under the Companies Act 2013 or under Companies Act 1956.
  2. The minimum net owned funds of the Company should be Rs. 2 Crore.
  3. There should be a minimum of one Director from the same background or a Senior Banker as a full-time director in the Company.
  4. The CIBIL records of the Company should be clean
  5. After all of the above conditions have been satisfied the online application on the website of RBI should be filled and submitted along with the requisite documents.
  6. A CARN Number will be generated.
  7. A Hard copy of the application also has to be sent to the regional branch of the Reserve Bank of India.
  8. After the application is properly scrutinized, the License will be given to the Company.

Documents for Incorporation of NBFC

  1. Certificate of Company Incorporation.
  2. Detailed information about the management along with a brochure of the company.
  3. A copy of PAN/Corporate Identity Number (CIN) of the company.
  4. Documents related to the office location/address
  5. Certified copy of the Memorandum of Association (MoA) and Articles of Association (AoA).
  6. A list of Directors’ profiles duly signed by each director must be attached.
  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.
  9. A board resolution on ‘Fair Practices Code’ is to be passed and a certified copy of the same is to be submitted.
  10. Certificate issued by the statutory auditor stating that the company is not holding the public deposit and does not accept it as well.
  11. Certificate specifying owned funds as on the date of the application from the Statutory Auditor is required.
  12. Information regarding the bank account, balances, loans, credits, etc. is to be furnished.
  13. If applicable, the audited balance sheet and profit and loss statement along with the directors and auditors report of the preceding three years have to be submitted.
  14. A self-certified copy of the bank statement and Income Tax Returns is required.
  15. Information detailing the company’s future plan, generally for the next 3 years, along with the projection of balance sheets, cash flow statements, and income statements.

Fees & deposited for NBFC registration :

  • While registering the company, a fee based on the authorized capital of the company is to be paid to the Ministry of Corporate Affairs (MCA).
  • A company would also need to pay fees on the basis of the authorized capital and other few factors for the MOA (Memorandum of Association) and AOA (Articles of Association) of the company.
  • Simplified Proforma for Incorporating Company electronically (SPICe) filling might also require the company to pay certain fees.
  • For a Reserve Unique Number (RUN) and Director Identification Numbers (DIN), a predetermined fee is to be paid to the MCA.
  • A Digital Signature Certificate (DSC) is required for every director and thus its generation would require a payment of periodic fees
  • Additional fees are required to be paid while submitting the application to the registrar.

Compliance that an NBFC must follow.

  1. They cannot receive deposits that are payable on demand.
  2. The public Deposit which the company can take should be for a minimum time period of 12 months and a maximum time period of 60 months.
  3. The interest charged by the Company cannot be more than the ceiling prescribed by the Reserve Bank of India.
  4. The repayment of any amount so taken by the Company will not be guaranteed by the Reserve Bank of India.
  5. 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.
  6. The deposits taken by the Public will be unsecured.
  7. The Company has to submit its audited balance sheet every year.
  8. A statutory return on the deposits taken by the company has to be furnished in the form NBS – 1 every year.
  9. A Quarterly Return on the liquid assets of the company has to be furnished.
  10. 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.
  11. 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.
  12. The credit rating has to be taken every 6 months and submitted to the RBI.
  13. A minimum level of 15% of the Public Deposit has to be maintained by the Company in Liquid Assets.

Contact our Expert Advisory Team for more details

  • NBFC Registration/ Incoroporation
  • NBFC takeover/ Acquisition
  • NBFC compliances
  • NBFC Backoffice services
  • NBFC Financing

If you have any query regarding our services

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