What is the process of NBFC registration and documents required for NBFC registration?

What is NBFC registration?

NBFC stands for Non-Banking Financial Company that is registered under the company act of India designed in 1956. Further working of NBFCs is regulated by RBI (Reserve Bank of Indian) under the norms of the reserve bank of India act 1934. According to the norms of RBI act 1934, non-banking financial companies cannot perform the following functions:

•    Internal audit

•    Investment portfolio management

•    Compliance and strategic functions for KYC (know your customer) norms

•    Sanction of loans.

Business activities performed by NBFCs according to the norms:

Advances and loans, Accession of stocks/ share/ debentures/ bonds/ securities that are remarkably issued by the local authority or by the government or by other similar natured marketable securities like chit business, hire-purchase, insurance business, etc.

What is the process of NBFC registration?

NBFC registration is a five-step process. While following steps keep a check on the documents required for NBFC registration.

Step 1: Firstly, you have to construct a company whose net owned funding is of INR 2 crore. 2 crore is the minimum limit required for NBFC registration that includes equity capital share and not preference share capital.

Step 2: The further step is to open a bank account and deposit the money in the account. Keep a check that your account is free from all the claims.

Step 3: Once you have deposited the money, now you can apply online to the reserve bank of India for the registration certificate.

Step 4: Next, you have to submit the documents required for NBFC registration to the regional office of RBI.

Step 5: Congratulation! Once you have followed the above step RBI will grant you the registration certificate.

Note: the filed application is carefully reviewed by RBI. They may seek out the further required clarification or documents from time to time. RBI only grants the certificate if all the documents required for NBFC registration are furnished to their satisfaction.

What are the documents required for NBFC registration?

Following are the documents required for NBFC registration:

•    Copy of Certificate of incorporation issued by the ROC

•    An extract of the main object clause in MAO that clearly depicts the financial business.

•    Audit reports, including the audit balance sheets and profit and loss account

•    Copy of the highest education and professional qualification of the director of the company

•    Copy of experience certificate of the director in the service sector, including the banking sector

•    Banker’s report on the details of loan balances and deposits on the conduct of account and on the date of application.

Documents required for NBFC registration: requisite for registration with RBI:

•    The respective company should have a record under the company’s act 1956 or companies act, 2013.

•    A company should have an at least net owned fund of INR2 crore.

Other than these you require following statements from the board of resolution:

•    Fair practices code adherence as per the guidelines of RBI

•    Non-carrying out any kind of NBFC activity

•    Non-carrying out of acceptance of any public deposits.

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