Loan Company is a type of financial institution carrying its principal business of providing finance in the form of loans or advances. They obtain funds by taking deposits from the public and give loans to small-scale traders. Generally, these type of companies obtain funds in the form of public deposits and give loans to wholesale and retail traders, small-scale industries and self-employed persons. By offering higher rates of interest, they collect fixed deposits from the public and give loans to others at relatively higher rates of interest.
Takeover process requires prior approval of the Reserve Bank of India whereas minor changes in the management or control are outside the purview of the approval but in case of significant changes, prior approval of RBI is required to be obtained.
The next step is to make an application to the RBI for the approval on the letterhead of the company along with the following required documents:
An application shall be submitted to the Regional Office of the Department of Non-Banking Supervision in whose control the Registered Office of the NBFC is located. All the queries raised by the RBI shall be timely answered in respect of the takeover so as to avoid any unforeseen delay in the approval. Usually, an application for NBFC takeover goes through a processing time of three to four months in the normal course of business.
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