Regulations for NBFC registration with RBI in India
Company type
Regulators
RBI registered NBFC/ NBFC License from RBI
The RBI is in charge of regulation, supervision, monitoring, and enforcement.
Other regulators oversee NBFCs.
It is determined by the type of institution.
Institutions of Housing Finance
National Housing Bank
Merchant Banking Firm/Venture Capital Fund Firm/Stockbroking Firm/Collective Investment Schemes (CIS)
SEBI or Securities Exchange Board of India
Mutual Benefit Corporations and Nidhi Corporations
MCA or Ministry of Corporate Affairs
Chit Fund Companies
State Government
Insurance Companies
Insurance Regulatory and Development Authority
Non-Banking Non-Finance Companies
The Companies Act of 1956 governs regulation, supervision, monitoring, and enforcement.
To be regarded as an NBFC, a business must be registered in accordance with the laws, regulations, and requirements outlined in the Companies Act 2013.
An NBFC's minimum fund size should be at least Rs.2 crores, and it should not be borrowed money. (This limit varies in other circumstances, such as specialised NBFCs: "NBFC-MFIs, NBFC Factors, CICs, as determined by the kind of NBFC"). Any present from a spouse is classified as owned-funds.
· At least one-third of the directors must have financial experience.
· There must also be a thorough plan for the following five years.
For a corporation to be classified a "IDF-MF," the minimum owned fund should be Rs.3 crores, the CRAR should be 15%, and the NPA should not exceed 3% of the net advances. In addition, the firm should have been in existence for the previous 5 years and profitable for the last 3 years.
The following are the important documents necessary for an NBFC registration in India:
1. Documents pertaining to the company's administration and management
2. Certificate of Incorporation
3. The applicant-company or firm's Memorandum of Association and Articles of Association
4. Documents indicating the company's location
5. Detailed information on the Company's Directors or Partners
6. For the previous three years in a row, the company's accounts have been thoroughly audited.
7. Board Resolution in Favor of NBFC Formation Should have a bank account with a minimum paid-up equity share capital of INR-2 Crore Income tax PAN, and so on.
To obtain an NBFC licence from the RBI, you need to approach MUDS Management, India's top legal firm. Due to their extensive understanding of rules and regulations, consultancies have made NBFC registration with RBI a simple and low - cost procedure.
Advantages of NBFC Registration with RBI
· NBFCs can provide their clients loan and credit services.
· These firms can also deal in financial instruments.
· NBFCs can also participate in wealth management, such as maintaining a stock portfolio.
· As big corporations invest large sums of money in national initiatives, they become the final choice for many other enterprises.
· These businesses operate at a far quicker pace than banks.
· You no longer need to rely on bank branches because of technological improvements.
· Because of digitalization, the reach of NBFCs has expanded and they can now reach a bigger audience in seconds.
· Investing in real estate has become more beneficial with NBFCs because of their adjustable interest rates, simple repayment alternatives, and suitable property collaterals, all with quick and easy processing.
· Most NBFCs have forged ties with the government and used their database to determine a customer's worthiness prior to loan approval. This minimises risks while increasing earnings.
· Based on their various lending structures, NBFCs can provide both secured and unsecured loans. These firms play an important role in the economy's financial services and have seen major changes in recent years. And, after adopting high-end tech-based business methods, the responsibilities they provide are as follows:
· Because traditional banks reject the majority of applicants, NBFCs establish a beneficial balance in the country's financial demands.
· These firms examine a potential client using an alternative credit rating mechanism, and only loans are handled after that.
· The NBFC model has been used by the majority of Indian Fin-tech businesses to provide financial services.
What are the prerequisites for RBI registered NBFC?
A corporation registered under the Companies Act of 1956 that wishes to conduct business as a non-banking financial institution, as defined in Section 45 I(a) of the RBI Act of 1934, must meet the following requirements:
i. It must be a company incorporated under Section 3 of the Companies Act of 1956.
ii. It should have a net owned fund of at least Rs. 200 lakh. (The minimum net owned fund (NOF) necessary for specialist NBFCs such as NBFC-MFIs, NBFC-Factors, and CICs is specified individually under the specialised NBFC FAQs.)
To acquire NBFC license from rbi, you should consult India’s leading legal consultancy MUDS Management. NBFC registration with RBI has become an easy task as consultancies make it an effortless and quick process due to good knowledge of laws and regulations.