NBFC Registration in Bangalore
Introduction
Non-Banking Financial Company (NBFC) is a financial institution that
does not have a banking license but is allowed to offer financial
products and services to customers. NBFC is primarily concerned with the
business of loans and advances, acquisition of shares, finance leasing,
hire-purchase, chit fund, etc. It is important to note that an NBFC is
different from the bank in ways like an NBFC cannot accept savings and
current account deposits, cannot issue cheques drawn on itself and its
depositors do not get deposit insurance and credit guarantee coverage.
Choose a Business Structure: Decide on the type of NBFC you want to establish, such as an asset finance company, loan company, investment company, etc.
Incorporate the Company: Register your company under the Companies Act, 2013, with the Ministry of Corporate Affairs (MCA). Obtain a Certificate of Incorporation (COI) after completing this step.
Eligibility Criteria for NBFC Registration
- Company should already be registered under Company Act 2013 or Company Act 1956, as private or public limited company.
- Company should have a business financial planning for at least 5 years.
- Good CIBIL score or credit rating.
- Minimum net owned funds shall be Rs. 2 crore or above
- Minimum assets should be worth Rs. 200 crore or above
- Must comply with the capital compliance and FEMA.
- One third of directors should have financial experience.
NBFC in India can be basically categorized into:
- Deposit accepting NBFCs.
- Non-deposit accepting NBFCs.
Minimum Capital Requirement
Ensure Adequate Capital: An NBFC in India must have a minimum net owned fund of Rs. 2 crores (may vary based on the type of NBFC). Ensure compliance with this requirement.
Application to RBI
Online Application: Prepare and submit an online application to the RBI through the COSMOS (Comprehensive Online Submission Module) portal.
Documents Required: Prepare necessary documents, including the company's details, business plan, KYC of directors, and shareholders, financial projections, compliance certificates, etc.
Due Diligence and Verification
RBI Verification: The RBI will scrutinize the application and conduct background checks on the directors and shareholders. They may also conduct physical verification of the registered office.
Fit and Proper Criteria: RBI assesses the 'fit and proper' criteria for directors and major shareholders to ensure their integrity and financial soundness.
Approval and Post Approval
RBI Approval: Upon successful verification and compliance with RBI guidelines, the authority may grant the Certificate of Registration (CoR).
Post-Approval Compliances: After receiving the CoR, comply with additional RBI regulations like maintaining reserves, periodic reporting, prudential norms, etc.
Registration with Other Authorities
Tax Registrations: Obtain PAN, TAN, and GST registrations as applicable.
Other Registrations: Register with other authorities like the Securities and Exchange Board of India (SEBI) if dealing in securities or the Credit Information Companies (Regulation) Act, 2005.
Regular Compliance
NBFC Prudential Norms: Comply with RBI regulations regarding capital adequacy, income recognition, asset classification, provisioning norms, etc.
Annual Compliance: File annual audited financial statements, conduct internal audits, and submit compliance reports to the RBI.
Advantages of NBFC Registration in Bangalore
- Provides loans and other credit options.
- NBFCs are more profitable than private and public sector banks because of less investment.
- Registration process is simpler than other banks or lending institutions
- Loan processing feature takes lesser time as compared to banks
- NBFCs helps in managing portfolios of stock and shares.
- Helps to trade in money market instruments.
- CIBIL or credit score does not become hindrance in getting loan.
Created & Posted by (Dolika)
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