Non Bank Finance Company Registration
All Non Bank Finance Company Registration firstly registered under Companies Act 2013 and thereafter seek approval of RBI for carrying on NBFC Activities.
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As the name itself suggests it is a Finance Company but it is not a banking company as per definition contained in Banking Regulation Act 1949. A Non Bank Finance Company is a Company registered under Companies Act 2013 and to carry the activities of NBFC, grant permission from Reserve Bank of India (RBI). NBFC registration and compliance are governed by section 45 IA of RBI Act 1934.
The incidental objective of Non Bank Finance Company (NBFC) is to carry the activity of Loans and Advances, acquiring shares, hire purchase, chit fund etc. NBFC are restricted to accept any demand deposits i.e. saving and current deposits, however NBFC can accept and hold term deposits after obtaining special authorisation from RBI and that too should not exceed 1.5 times of its net owned funds. NBFC cannot issue cheques drawn on itself.
Non Bank Finance Company (NBFC) registration can be obtained in various categories, such as:
1. Infrastructure Finance Company (IFC-NBFC): In this NBFC use to finance the infrastructure related projects.
2. Asset Finance Company (AFC-NBFC): In this NBFC use to indulge in hire-purchase mechanism and provide the asset creating pledge on it.
3. Infrastructure Debt Fund (IDF-NBFC): In this NBFC use to invest in Public Partnership Project (PPP) relating to infrastructure, such NBFC have net owned fund of INR 300 crore or more.
4. Non Banking Financial Company – Factors (NBFC-Factors): In this NBFC deals with the factoring business of bill receivables.
5. Mortgage Guarantee Company (MGC-NBFC): In this NBFC enters in three way contract among the buyer of house, housing finance company and itself. It is created to guarantee the mortgages created by Housing Finance Companies.
6. Micro Finance institution (MFI-NBFC): In this NBFC lends to small lenders based upon certain guarantee or mortgage.
7. Investment Company (IC-NBFC): In this NBFC carries on the activity of acquisition or acquiring of shares.
8. Systemically Important Core Investment Company (CIC-ND-SI-NBFC): In this NBFC carries on the activity of acquisition of shares and securities subject to certain conditions such as 90% if its total assets should be in form of shares and securities, Total exposure to single group companies must not exceed 60%, its net owned funds should not be less than INR 100 crores.
Criteria for registration of Non Bank Finance Company (NBFC) as stipulated in section 45-IA of the Reserve Bank of India Act 1934 are:
• For registration of NBFC, there must be a company duly registered under Companies Act 1956 or Companies Act 2013
• There must be atleast 1/3 of total Directors must be full time and those Directors must have minimum experience of 10 years in the field of finance.
• The proposed NBFC must submit its projections in the form of future detailed estimation plan for atleast 5 years.
• The proposed net owned Fund should not be less than INR 2 crores, that too comprises of equity paid up share capital only. However, this net owned fund might vary depend upon the type of NBFC registration. Some type of NBFC require much more capital base.
• The Directors of the NBFC must be of good standing and their CIBIL score must also be good.
The entire process of registration and compliance for Non Bank Finance Company (NBFC) is online and can be done from the portal specified by RBI i.e. cosmos.rbi.org.in
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