Non-Banking Financial Company (NBFC) Book Now

NBFC or Non-Banking Financial Company is that kind of financial institution which provides various financial and non-financial services to individuals, business enterprises, entrepreneurs, etc. They are different from the Cooperative and Commercial Banks, They do not need to hold a banking license but must strictly follow the rules and regulations provided by RBI from time to time.

NBFCs, most commonly, operate in the field of industrial and commercial loans and advances, deposits, leasing, hire-purchasing, investment funds, chit fund business, insurance business, instruments of the capital & money markets such as stocks, debentures, bonds, and many other similar activities.

India’s financial sector has shown consistent growth for the past two decades. The NBFC part of this sector has transformed tremendously over the past few years. And NBFCs have been at the forefront in driving new credit disbursals for the country’s underserved retail and MSME market.

NBFC License must be taken from RBI u/s 45-IA of the RBI Act of 1934. The financial institution wishing to be registered as NBFC must, first, be duly registered either as per the Companies Act of 2013, or earlier Act of 1956.

RBI strictly regulates and ensures that the NBFCs are complying with the provisions and regulations provided in Chapter III B of the RBI Act. The principal business activity of NBFCs is to raise capital from the public depositors & investors and lend these further to the borrowers.

Documents Required for NBFC License

Certified Copy of Certificate: Take a Certified Copy of COI, MOA (Memorandum of Association), and AOA (Article of Association) from the Regional ROC (Registrar of Companies)

Updated KYC: Latest KYC details, income proof, credit report, and Net-worth Certificate of Directors and shareholders.

Net Worth Certificate: Collect updated net worth certificate of Directors, member/shareholders, and Company.

Education: Education & qualification proof of the Directors.

Company’s Details: Company’s PAN & GST number. Documents in support of the address of the company.

Bank Account: Details of the bank account of the company. This must have at least Rs. 2 crore deposited as the minimum NOF requirement. And well audited for the last 3-years.

Banker’s Report: A report to be obtained from the bank confirming the No Lien remark on the Initial Fixed Deposit of Rs. 2 crore.

Board Resolution: The board’s resolution approving the formation of NBFC.

Underwriting model: A detailed action plan, for the next 5-years, about the loan products, complying with the Fair Practices Code, credit, and risk assessment policy.

Organizational Structure: Complete plan of the organization hierarchy and decision-making process. The proposed criteria on which a loan application will get approved or rejected.

IT Policy: The planned system and Information technology policy.

RBI Conditions for Granting NBFC License
For NBFC registration, the company shall apply in the format as specified by the RBI. Before registering the company as NBFC, RBI may inspect the financial & other books to satisfy the following conditions:

• that the NBFC can pay its present or future investors in full as and when their claims accrue.
• that its operations are not likely to be carried in any manner detrimental to the interest of its existing or future investors.
• the general character of the management and the Board shall not be prejudicial to the interest of the public or depositors.
• it has sufficient capital structure and earning potential.
• public interest shall be served by licensing this company as an NBFC.
• the grant of CoR shall not be unfavorable to the operation of the financial sector and is consistent with monetary stability, economic growth and considering such other relevant policies of RBI.