Eligibility Norms to Start an NBFC Business

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Eligibility Norms to Start a Business?
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NBFCs
Non-Banking Financial Companies (NBFC) do not
fall in the legal definition of Banks but they
proffer banking facilities and financial
services. It is a well-known fact that Banks are
not able to cater to the financial needs of all
Indians, however hard they try therefore, more
and more companies are applying for NBFC
Registration.  The functioning of NBFCs is
regulated and monitored by the RBI in compliance
with the provisions mentioned in Chapter III B of
the RBI Act of 1934. The segments which are
largely served by the NBFCs are instruments of
the capital and money markets such as stocks,
bonds, along with hire-purchasing, deposits,
leasing, insurance business, investment funds,
and chit business and many more similar
activities.
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Services NBFCs Can Offer The business activities
of NBFCs include loans advances, acquisition of
shares or stocks or bonds or debentures or
securities that are issued by govt or local
authority or other marketable securities of
similar nature, like leasing, hire-purchase,
insurance business, chit business, etc. Services
NBFCs Cannot Offer RBI clearly defines the
domains which cannot be touched by the NBFCs, and
thus agriculture activity, industrial activity,
purchase or sale of any goods (other than
securities) or providing any services, sale or
purchase or construction of the immovable
property, cannot be dealt with by NBFCs.
Services
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Eligibility Norms

• Company should be registered under the Companies
  Act, 2013 or Companies Act, 1956
• Company should have Minimum Net Owned Fund of INR
  2 crore
• (Net Owned Funds to be calculated on the basis of
  the last audited balance sheet of the Company)

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Types of NBFCs, Based On The Nature of
Activity

• Mortgage Guarantee Company
• Asset Finance Company
• Microfinance Company
• Infrastructure Finance Company
• Housing Finance Company
• Investment Company
• Loan Company
• Core Investment Company

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Decode the Procedure Of NBFC Registration

• First formality is forming a company with Minimum
  Net Owned Fund of INR 2 crore (Equity Share
  Capital not Preference Share Capital).
• Then the company needs to open a Bank Account and
  keep the entire sum of INR 2 crores in a banks
  deposit account which should be free from all
  liens).
• The Applicant company is then required to file an
  online application on the RBIs website.
• After the submission, the applicant will get a
  reference number that shall enable to facilitate
  inquiry in the future.
• Thereafter, the company needs to submit the hard
  copies of the required documents to the concerned
  Regional Office of RBI.
• The Regional Office will verify the accuracy of
  all submitted documents and on satisfaction, it
  will forward the application for NBFC
  registration to the central office.
• The central office of RBI grants the NBFC
  registration only after the applicant fulfils all
  prescribed requirements in section 45-IA, of its
  act of 1934.

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NBFCs have become the driving force of the
Indian economy, their USP being versatility and
flexibility which helps them to penetrate all
corners of the country!-Shweta Gupta, Founder,
and CEO, MUDS For more information visit
https//www.muds.co.in/nbfc-registration/
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Thank You!