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The process of NBFC takeover has been simplified by the RBI. NBFC takeover is an easier process in comparison to NBFC fresh registration. In NBFC takeover, firstly acquirer of NBFC should conduct due diligence and overview the financials of the target company. Under this, MOU is signed with advance money.

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Everything you need to know about NBFC Registration

Non-Banking Financial Company, commonly known as NBFC, is a form of Company registered underneath the Companies Act, 2013, which is involved in numerous financial services like providing loans, supporting credit facilities, assets financing, currency exchange, lending, and many more functions.

An NBFC registration in India is done as per the rules and regulations of the RBI Act.

What do you mean by NBFC?

As per Section 45-1 (c) of the Reserve Bank of India Act, 1934, any non-banking company providing any financial services are considered as NBFC. Ministry of Corporate Affairs and RBI governs the NBFCs. Non-Banking Financial Company is a financial institute that suggests banking services, but does not have a banking license. A Non-Banking Institution has the prime business of getting deposits under any scheme or arrangement or in any other prescribed manner. Such deposits and can be attained in one lump sum or installments by way of contribution.

Some NBFCs does not require Registration from the RBI they are-

  • Nidhi company
  • Investment businesses whose assets are less than 100 crores
  • Merchant banking companies
  • Companies engaged in the business of stockbroking
  • Companies involved in venture capital
  • Insurance companies having incorporation certificate
  • Chit fund companies
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What are the advantages of taking an NBFC Registration in India?

  • It can easily trade in the money market instruments
  • It offers loans and credit facilities
  • It provides wealth management by managing stocks and shares
  • They are the last resorts for borrowing capital
  • They are the most substantial back-up for providing finance
  • It advises the companies for the process of merger and acquisition
  • It prepares for the industry and market studies for the companies.
  • The recent methods exercised by the NBFCs have overcome vital challenges
  • They have made use of technological advancements such as the use of mobile phones, the internet, which has reduced the demand and dependence on the bank branches.

How can you differentiate between an NBFC and a bank?

NBFC can perform activity just like any normal bank. The activities of banks and NBFCs are moreover similar. The financial intermediaries are regulated by the Companies Act, 2013, and the Banking Regulation Act, 1949. The control is under the Reserve Bank of India. The difference is as follows: -

  • NBFC cannot receive demand deposits like banks;
  • NBFC cannot issue cheques on themself;
  • Does not form part of the settlement or payment scheme;
  • If the facility of deposit insurance providing by Deposit Insurance and Credit Guarantee Corporation (DICGC)is not available to the depositors of NBFC.

What are the role and functions of NBFC registration in India?

The specific purpose of NBFCs are-

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Development of Infrastructure Sector

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Increase Wealth Creation

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Employment Generation

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To Provide Finance to Weaker Section

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Economic Development

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Contribution to State Treasury

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Provides Audit and Specialized Credit

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Development of Financial Market

What are the eligibility criteria for NBFC Registration?

As per Section 45(1A) of the RBI Act, any individual or Company eager to start a loan or investment business in India needs to register a company that meets the requirements prescribed for NBFCs. They are-

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Directors Profile

The directors should have knowledge and experience regarding finance, credit and banking

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NBFC Business Plan

The Company should have a detailed business plan for the next five years

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Fund

Shareholders must have two crores as the Net Owned Fund. Investment should not be borrowed fund

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Credit History

The directors and shareholders must not have any write-offs

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Quality of Capital

The Net Owned Fund must be tax paid, and all legal compliance of the management of the Company must be clean and legally up to standard.

Based on Liabilities

NBFC-D

Deposit-taking NBFC

NBFC-ND

Non-deposit taking NBFC

What is the procedure for NBFC registration?

The steps in the NBFC registration process are-

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What are the documents required for Registration of NBFCs?

The documents required for NBFC registration are-

  • MOA of the Company
  • Registration certificate
  • Income test certificate
  • Net worth certificate
  • Clean banker report
  • Education proof’
  • Credit report of directors and shareholders
  • Experience certificate of directors and shareholders
  • Organization matrix
  • Various policies

What are the post-registration compliances?

The post-registration compliances are as follows-

  • Statutory Audit
  • Income Tax Return Filing
  • Tax Audit
  • GST Return Filing
  • Registrar of Companies Returns
  • RBI Compliances

What are the various NBFCs classifications?

Based on Activities-

Investment Credit Company

It is known as a loan company, having ICC license you can lend and finance

NBFC-P2P (Peer to Peer Lending)

lenders and Borrowers work together and Manages funds

NBFC-AA (Account aggregator)

Financial Info regarding service provider

NBFC-MFI

Provides credit and loans to the delicate section of the societies

NBFC-ND and CIC

Investment in stocks for Debt in the same group of Company

NBFC-IFC

Long term debt to Infrastructure companies

NBFC-Factor

Receivable Financing or Bill Discounting

Mortgage Guarantee Company

Providing Mortgage guarantee services

NBFC-Financial Holding

Created for Banking License

What is NBFC Annual Compliances?

If a company has effectively obtained online NBFC Registration, then it’s obligatory to fulfill all the NBFC annual compliances. Where NBFC is failing to accomplish the contracts, NBFC becomes liable for the hefty penalties. The penalties can even lead to the cancellation of the Registration.

Annual compliance of NBFC has to be filed within six months by any NBFC after attaining the Registration from the RBI. There are mainly two categories of NBFCs-

  • Deposit-taking NBFC (NBFCs - D)
  • Non - Deposit NBFCs (NBFCs- ND)

NBFCs play a significant role in the development of the infrastructure, creation of wealth, and economic development. NBFC registration in India is a complex process, and the government has encouraged Registration since they have a vital role in channelizing and mobilizing the financial resources in a precise direction. For incorporating NBFC and getting its certification, the Company should comply with all the guidelines related to the registration process.

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How We Work

A Work Process for NBFC Company Registration.

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Customer Registration

Client information is entered into our database.

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Receive Payment

After order generation payment is received from client.

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Submit Documents

Required documents are collected from client.

At this video talk about nbfc takeover process for india.

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