NBFC Registration

NBFC Registration - What is NBFC?

NBFC (Non-Banking Financial Company) is engaged in financial activities as defined under section 45-IA of the RBI Act 1934 but does not possess a banking license. A company can offer services such as Loans and Credit Facilities, Assets Financing, Acquisition of Shares, Stock, Bonds, Hire-Purchase, Insurance, Currency Exchange, Peer to Peer Lending, hedge funds etc.

However, they do not have permission to perform banking operations of accepting demand deposits from the public. They also cannot issue cheques drawn on it.

NBFCs are registered as per the rules and regulations prescribed under Companies Act 2013 and the RBI Act 1934. They are playing a vital role in executing financial functions in the economy. They help to meet the demand that remains unfulfilled by the traditional banking system in shorter processing time.

An NBFC can provide both secured and unsecured loans to the takers based on alternative lending models. The government has been promoting NBFC so that the unorganised money lenders and people willing to run financial services can organise their lending operations.

Benefits of NBFC License- Business Environment for NBFC in India.

The business environment in India is favorable for exponential growth. Financing business in India is highly regulated by the Reserve bank of India.  A Registered NBFC allows to gain the confidence of borrowers, offers you the security of capital invested in the business.

Low-Cost NBFC Registration Process

01

Legal and Business risk

02

Attracts more borrowers

03

Easy to Raise Investments in NBFC

04

Access of CIBIL

05

Open Interest Rate without any Cap

06

Free to charge Processing Fees–No Cap

07

Protection by Law for recovery of loan

08

Easy Bank Finance

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Up to 100%, FDI Allowed

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Quick Loan Processing

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Soft Eligibility Criteria

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Fewer Rules and Regulations

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What are 

What are the Roles and Functions of an NBFC?

NBFCs play a significant role in conducting financial services in the Indian economy. NBFC in India have undergone too many transformations in recent years. At present, most of the NBFC Start-ups have adopted high-end tech based business model.

These NBFCs are working actively to promote financial inclusion & as well aggressively complementing the banking sector.

• NBFC creates a favorable balance in addressing the financial needs of the country, where a large number of applicants are turned down by traditional Banks of India.
• NBFC provides loans based on alternative credit scoring model to assess the loan application.
• Indian Fintech Start-ups have been using NBFC model to offer financial services.
• Credit growth of registered NBFCs is recorded at 24.3% per year as against 21.4% for banks.
• These NBFCs are working actively to promote financial inclusion & as well aggressively complementing the banking sector.
• NBFC creates a favourable balance in addressing the financial needs of the country, where a large number of applicants are turned down by traditional Banks of India.
• NBFC provides loans based on alternative credit scoring model to assess the loan application.
• Indian Fintech Start-ups have been using NBFC model to offer financial services.
• Credit growth of registered NBFCs is recorded at 24.3% per year as against 21.4% for banks.

Checklist for NBFC Registration in India

According to Section 45(1A) of the Reserve bank of India for any company to register as NBFC, the below conditions must fulfil.

• Directors Profile

  at least 1/3 of Directors must have experience in Finance.

• Unique Business Plan

  The company must have a detailed business plan for the next 5 years

• Owned Fund

  the Shareholders in total, Must have Rs. 2 Cr as a net owned fund, Invested Capital must not be the borrowed fund. A gift from Spouse is considered as an Owned fund.

• Clean Credit History

  The Directors and Shareholders must have no write-offs or have not willfully defaulted the repayment of loans to NBFC/Bank.

• Experienced NBFC Advisor

  Registering an NBFC as well as meeting the Regulatory compliance requires expert knowledge. Hence you may need to hire an experience NBFC Consultants to take care of NBFC Registration and Compliance after Cor.

What are the Types of NBFC in India?

There are two  categories of NBFC. These are distinguished on activities in operation as well as on the authorization to take deposits.

NBFC Based on the Authorization to Take Deposits

• The Deposit Taking NBFC (Type -1)
• Non-Deposit accepting NBFC (Type -2)

NBFC Based on their Activities

NBFC Based on their Activities

Investment and Credit Company

Infrastructure Debt Fund (IDF-NBFC)

Factors (NBFC-Factors)

Peer to Peer Lending Marketplace

Infrastructure Finance Company

Core Investment Company

Micro Finance Institution (NBFC-MFI)

Mortgage Guarantee Company

Housing Finance Company

Chit Fund Company

Mutual Benefit Finance Company

NBFC Registration Departments

The founders are required to follow both online as well offline NBFC application process to obtain the NBFC license. The Reserve bank of India is an autonomous body, and it has two departments to regulate and supervise the function of an NBFC.

DNBR (Department of Non-banking Regulation)

The DNBR is responsible for conducting the Fresh NBFC Registration process as well for preparing the regulation for the NBFC. The DNBR has transparent as well innovative assessment process of NBFC Application.

The DNBR will email you or send you a formal notice if they need of any additional documents during the NBFC registration process. The RBI expects your submission/response to a notice within 30 days as per the NBFC regulations.

• Assessment of Application Submitted for NBFC License (All Category of NBFC)
• Investigation of Directors / Shareholders Profile
• Communication with Applicant Company in Pre-Registration Process
• Communicates Final Decision to the applicant company with the Approval of Executive Director office (RBI)
• Regulates & Administer NBFC Business in India
• Publish Notifications, Circular & Order for NBFC

DNBS (Department of Non-Banking Supervision)

DNBS is responsible for post-registration compliance and other administrative issues about NBFCs.

• After Approval from DNBR (Department of Non-banking Regulation) collects Net owned certificate & Bankers Report – before they issue you the NBFC License (CoR) in Original
• Responsible for Complying the NBFC Rules and Regulations issued by the RBI
• Conduct Audit / On-site Inspection from Time to time
• Communicates with NBFC for all On-going compliance
• Suspend / Cancel NBFC License in case of Non-Compliance with the Laws
• Educate and Conduct seminar for the general awareness about the NBFC Regulations, Compliance and Business.

Applicants can expect an NBFC license in 90 to 120 days after successful acceptance of an NBFC application.

How to Apply for NBFC Registration? - NBFC Registration Process Checklist

Before the filing of Application for COR (Certificate of registration), one should read the following checklist of NBFC registration Process.

Hire NBFC Registration Consultants

Step 1

Business Plan

Step 2

Application for CoR
(Certificate of Registration)

Step 3

Step 1 – Hire NBFC Registration Consultants

• Experience Matters

  Select an Experienced Consultant with Minimum 10+ years of Experience in NBFC & Banking laws.

• Credibility

  An NBFC Consultant firm should have a good team size of 100 to 150 with a combination of professionals like CA, CS, Lawyers, and Senior Bankers.

• Verify Reference

  Ask the NBFC Consultant to give you a minimum of three references of clients

Step 2 – Business Plan

• Founders and Executive Summary
• Loan Product
• Lending Process with SOP (Standard Operating Procedure)
• SWOT Analysis
• Credit & Risk Model
• Competitors Analysis
• Lending model – Digital / Branch Model
• Financial forecast

Step 3 – Application for CoR (Certificate of Registration)

• The middle name of Company must have Finance, Finserv, final, Investment, Capital, Fintech, and Leasing etc. For Example Enterslice Capital Limited
• Create a Fixed Deposit of Rs. 2 Cr with Scheduled commercial bank
• Verify the Backgrounds of Promoters
• Necessary documentation for obtaining an NBFC license
• Submit an online COR application on RBI's website (COSMOS), thereafter a CARN will be generated
• Physical submission of Application with the regional department of RBI
• RBI will scrutinize submitted application and COR will be issued.

What are the Support Services from Enterslice after Certificate of Registration from the RBI?

• Advisory for Fintech Based Credit Assessment model
• Assistance in SOP of the Organization
• Assistance in designing loan product
• Finalizing reporting formats from various verticals of the organization
• Guidance on Digital Financial Services Marketing
• Assistance in developing Company Policies
• Development of High-Level Business Plan & Investor Deck
• Helping founders in preparing to go to market strategy
• Assistance in the fundraising process via FDI Automatic route
• Assistance in meeting secretarial compliances
• Assistance in meeting RBI Compliance
• Advisory on Adoption of Ind-AS
• Internal Audit Services

What are the NBFC Registration Fees?

For NBFC registration, there is a requirement of minimum capital of Rs. 2 cr therefore an applicant needs to register a company with the prescribed capital along with the requisite government fees.

What are the NBFC Compliances after COR?

There are certain complainces to meet after the completion of the NBFC Registration Process. Additionally, they need to follow the RBI Act, RBI Guidelines, Circulars, and notifications published in the public domain from time to time.

• Adoption of Fair Practice Code
• Cosmos Registration
• FIU-IND Registration
• CIC Registration
• C-KYC Registration
• CERSAI Registration
• Filling of NBS-9 by use of Online Platform of RBI (COSMOS)
• Secretarial compliances
• Compliance of KYC Anti money Laundering
• Appointment of Statutory Auditor (CA having 5+ years of experience)
• Statutory Audit
• Tax Audit.
• GST Return Filing
• Income Tax Return filing
• ROC Returns
• Any other Compliance / Returns required by the Competent Authority

Fresh NBFC Registration vs. Takeover of Pre-Existing NBFC

Applying for new NBFC Application is always a better option than a takeover of existing ones. The registration of NBFC is simpler than before. This is especially for Foreign Companies, who intends to enter into the Indian Financial service market.

We always advise them to apply for the new NBFC registration Application instead of  buying existing. NBFC.

What are the NBFC Pre Registration Requirements?