One of the hugely popular ancillary services of ours globally reputed law firm of India, is the legal and supportive services for the excellent and swift registration of NBFCs in India and abroad. To help and serve people, companies, and firms of India and countries worldwide, in ours this hugely informative and beneficial web-article, we are extending rich information regarding the NBFC registration in India, importance of these companies in India, the requirements and procedure for registration of NBFC with RBI, and the most significant regulations imposed on the NBFCs in entire India.
The non-banking financial companies (NBFCs) are those companies which do not possess proper banking licenses, like the commercial or co-operative banks, but offer a variety of very supportive and helpful services to public depositors, borrowers, and investors in some selected areas of business. Again, these NBFCs not only help them (through bridging the gap between them) for commercial or financial profits and progress, but also act as a welcome and reliable intermediary between them and the institutions in the banking and financial sector of the country. Consequently, the number of NBFCs is ever-growing in most of the fast progressing and prosperous countries of the world, inevitably including India. So far, our lawyers of international renown have helped numerous companies and businessmen in connection with the incorporation or formation of NBFC in India, and therefore, our well-based law firm of Delhi is certainly one of the most trustworthy and expert law firms of India for such services. Hence, to start NBFC in India, anywhere in the whole country, our lawyers are ever ready to support the interested persons or companies. Our services for getting the NBFC certificate are highly efficient and responsible, and quite reasonable are our NBFC registration fees, for both Indian and foreign companies.
The usual and most preferred business areas of these NBFCs are leasing and finance, deposits, commercial and industrial loans and advances, insurance business, hire-purchasing, investment funds, instruments of the capital and money markets, chit business, and many other similar activities. Since December 2006, there exist three broad categories of NBFCs in India --- Asset Finance Companies (AFCs), Loan Companies (LCs), and Investment Companies (ICs).
NBFC Registration Steps, Process and ProcedureSince January 1997, acquiring the mandatory NBFC registration number for establishing a business in any of the above-specified areas, has been made essential by the RBI. For obtaining proper and secure registration under any of the three categories of NBFCs, the following are compulsory requirements:
- The applicant company must be perfectly registered as per the rules, regulations, and provisions given in the new Companies Act of 2013 or the earlier Companies Act, 1956.
- The company must be engaged in the business of any one of the above-noted fields. If the total financial flow in such a business gets more than 50% the total capital asset of the company in any year, then, getting the NBFC certificate is mandatory.
- The concerned company must hold a paid-up capital fund of INR-2Crore (as increased from April 1999), at the minimum. For foreign companies and investors desirous of setting up an NBFC anywhere in India, this minimum amount of paid up equity share capital is INR-5Crore. This recommended Net Owned Fund, ought to be present in company's bank account at the time of filing application for NBFC registration in India.
The prescribed format for making application for the NBFC registration is obtainable from the website www.rbi.org.in, along with information regarding the demanded documents and enclosures. Filing an online application with this website, gives a Company Application Reference Number, to enable the applicant for knowing the current status of the registration process. Along with the hard copy (in duplicate) of this online application, the applicant company then requires to make application together with all demanded documents and enclosures, to the concerned Regional Office of the RBI. After verification and approval of the submitted application and the attached documents, the regional office will send the application to the central office of RBI for crucial examination and grant of the desired certificate. If all terms and conditions provided in the Section 45-IA of the RBI Act of 1934 are fully satisfied by the applicant company, then, the cherished NBFC certificate will be issued, otherwise rejected. For getting information about the demanded documents, please visit other pertinent web-pages of this website.
NBFC Regulations in IndiaAll various activities, transactions, and working of the NBFCs of India are regulated, supervised, and strictly controlled by the RBI, in complete accordance with the regulations and provisions which are provided in the Chapter III B of the RBI Act of 1934. NBFCs in general, are subject to the following regulations (NBFC regulations) of the RBI of India which are promulgated from time to time by this apex financial institution of the country:
- NBFCs are not authorized by the law to accept demand deposits (which are liable to be demanded suddenly at any future point of time) from public depositors or investors.
- NBFCs are now empowered to issue cheques to their customers for payment or settlement purposes.
- The securing facility of the Deposit Insurance and Credit Guarantee Corporation (DICGC) is not available to the depositors of NBFCs; and therefore, RBI does not guarantee fair and punctual repayment of the deposits by these companies.
- All NBFCs are not permitted to accept conditional deposits from public depositors; only duly rated companies can do so, with recommended Minimum Investment Grade Credit (MIGC) rating.
- Again, the eligible NBFCs can accept/ renew deposits for a fixed period that varies from one year to five years.
- NBFCs are not allowed to provide higher or greater interest rates than the recommended ceiling rate by the RBI, at the specified point of time. At present, the maximal amount of interest any non-banking financial company of India can provide to its depositors is 12.5% per annum.
- NBFCs are not permitted or privileged by the RBI to provide any extra or additional benefits/ incentives/ gifts to their customers or depositors, than those usually offered by the banks.