How to get License for NBFC company in India

1. How to go for NBFC Registration
By CS Gaurav Kumar Sharma
9990694230
gauravdelhirav@gmail.com
www.csgauravsharma.com

2. What is Non-Banking Financial Company
(NBFC)?
A Non-Banking Financial Company (NBFC) is a company registered
under the Companies Act, 1956 or Companies Act, 2013 engaged
in the business of loans and advances, acquisition of
shares/stocks/bonds/debentures/securities issued by Government
or local authority or other marketable securities of a like nature,
leasing, hire-purchase, insurance business and chit business.
A non-banking institution which is a company and has principal
business of receiving deposits under any scheme or arrangement
in one lump sum or in installments by way of contributions or in
any other manner, is also a non-banking financial company
(Residuary non-banking company).

3. Salient features of the NBFC regulations
1. The minimum period to accept and renew public deposits
- Minimum 12 months, and
- Maximum period is 60 months.
2. There cannot be a provision of acceptance of deposits that are repayable on
demand.
3. NBFC are supposed to follow prescribed ceiling rate which is about 12.5
percent
4. NBFCs do not offer incentives or additional benefits to the depositors
5. There is no guarantee of insurance for the deposits to the NBFC
6. RBI does not guarantee you the repayment of the deposits
7. NBFCs do not accept deposits from NRIs except when the deposits are debit
to NRO account of the NRI. This is only possible if the amount does not
represent an inward transfer from the NRE account

4. Advantages of NBFCs:
A few advantages of NBFCs are as follows:
1. provide loan and credit facilities and support
investment in properties
2. Useful for trading money market instruments
3. You can fund private education through it
4. You can avail wealth management for portfolios such
as stocks and shares
5. It provides you with retirement planning

5. NBFCs are doing functions similar to banks.
What is difference between banks & NBFCs?
NBFCs lend and make investments and hence their activities are
akin to that of banks; however there are a few differences as
given below:
i. NBFC cannot accept demand deposits;
ii. NBFCs do not form part of the payment and settlement system
and cannot issue cheques drawn on itself;
iii. Deposit insurance facility of Deposit Insurance and Credit
Guarantee Corporation is not available to depositors of NBFCs,
unlike in case of banks.

6. Is it necessary that every NBFC should be registered
with RBI?
In terms of Section 45-IA of the RBI Act, 1934, no Non-
banking Financial company can commence or carry on
business of a non-banking financial institution without
Obtaining a certificate of registration from the Bank
and without having a Net Owned Funds of ₹ 2 crore.

7. What are the requirements for
registration with RBI?
A company incorporated under the Companies Act,
1956 or Companies Act, 2013 and desirous of
commencing business of non-banking financial
institution as defined under Section 45 I(a) of the RBI
Act, 1934 should comply with the following:
i. it should be a company registered under the
companies Act, 1956 or Companies Act, 2013
ii. It should have a minimum net owned fund of ₹ 200
lakh.

8. What is the procedure for application to the
Reserve Bank for Registration?
1. The applicant company is required to apply online
2. submit a physical copy of the application along with
the necessary documents to the Regional Office of the
Reserve Bank of India.
3. The application can be submitted online by accessing
RBI’s secured website https://cosmos.rbi.org.in .

9. Documents Required for NBFC Registration
The main and most significant documents required for nonbanking financial
company registration in India, are the following:
1. The certificate of company incorporation
2. Bank Account with a minimum paid up equity share capital of INR2Crore
3. The MoA and the AoA of the applicant company or firm
4. Document related with the location of the company
5. Duly filled in up and signed Annexure I, II, and Annexure III
6. Detailed information about the directors or partners of the company
7. Documents associated with the administration and management of the
company
8. Well audited financial accounts of the company for last three consecutive
years
9. Board Resolution in favor of NBFC registration
10. A brief documentary about the company's works and activities during the
last three years.
11. Income tax PAN, etc.
12. And, other relevant documents if requested

10. Returns to be submitted by deposit taking NBFCs
1. NBS-1 Quarterly Returns on deposits in First Schedule.
2. NBS-2 Quarterly return on Prudential Norms is required to be
submitted by NBFC accepting public deposits.
3. NBS-3 Quarterly return on Liquid Assets by deposit taking
NBFC.
4. 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.)
5. NBS-6 Monthly return on exposure to capital market by
deposit taking NBFC with total assets of ₹ 100 crore and above.
6. Half-yearly ALM return by NBFC holding public deposits of
more than ₹ 20 crore or asset size of more than ₹ 100 crore
7. Audited Balance sheet and Auditor’s Report by NBFC
accepting public deposits.
8. Branch Info Return.

11. Returns to be submitted by NBFCs-ND-SI
1. NBS-7 A Quarterly statement of capital funds, risk weighted
assets, risk asset ratio etc., for NBFC-ND-SI.
2. Monthly Return on Important Financial Parameters of NBFCs-
ND-SI.
3. ALM returns:
(i) Statement of short term dynamic liquidity in format ALM
[NBS-ALM1] -Monthly,
(ii) Statement of structural liquidity in format ALM [NBS-ALM2]
Half yearly,
(iii) Statement of Interest Rate Sensitivity in format ALM -[NBS-
ALM3], Half yearly
4. Branch Info return

12. Quarterly return on important financial
parameters of non deposit taking NBFCs having
assets of more than ₹ 50 crore and above but
less than ₹ 100 crore
Basic information like name of the company,
address, NOF, profit / loss during the last three
years has to be submitted quarterly by non-
deposit taking NBFCs with asset size between ₹
50 crore and ₹ 100 crore.

13. Annex - I

14. Annex - II

15. Thank you
9990694230
gauravdelhirav@gmail.com
www.csgauravsharma.com