NBFC Company Registration
Registering as a Non-Banking Financial Company (NBFC) in India is a regulated process governed by the Reserve Bank of India (RBI). NBFCs provide financial services such as loans, credit facilities, asset management, and investments, but they do not hold a banking license. Here’s a detailed guide on how to register an NBFC in India:
Eligibility Criteria
Before starting the registration process, ensure that your business meets the eligibility criteria set by the RBI:
- Company Incorporation: The entity must be a company registered under the Companies Act, 2013 or the previous Companies Act, 1956.
- Net Owned Fund (NOF): The company must have a minimum paid-up capital of INR 2 crores. For specialized NBFCs such as microfinance institutions, the requirement might vary.
- Directors: At least one of the directors should have experience in the financial sector.
Steps for NBFC Registration
- Incorporate the Company
- Register your company under the Companies Act, 2013.
- Ensure the company’s primary objective is financial activities.
- Meet Capital Requirements
- Secure a minimum of INR 2 crores as Net Owned Funds.
- The funds should be in the form of paid-up equity capital.
- Prepare Required Documents
Gather the necessary documents for the registration application:
- Certificate of Incorporation: Issued by the Registrar of Companies.
- MOA and AOA: Memorandum of Association and Articles of Association of the company.
- Net Worth Certificate: Prepared by a Chartered Accountant.
- Directors’ Profiles: Detailed profiles and experience certificates of the directors.
- Board Resolution: Authorizing the company to register as an NBFC.
- Bank Account: Bankers’ report showing no lien on the initial capital.
- Audited Financial Statements: For the last three years (if applicable).
- Business Plan: Detailed business plan for the next three years.
- IT Returns: Copies of the Income Tax Returns of the company and directors.
- Apply Online via COSMOS
- Visit the RBI’s COSMOS Portal:
- Go to the COSMOS website.
- Create an Account:
- Register and create a user ID and password.
- Submit the Application:
- Fill out the online application form and upload the required documents.
- CARN Number:
- After submission, you will receive a Company Application Reference Number (CARN).
- Submit Hard Copies
- After online submission, send the hard copies of the application form and supporting documents to the Regional Office of the RBI.
- RBI Review and Inspection
- The RBI will review the application and may conduct an inspection of the company’s premises and records.
- The review process includes checking the financial soundness, management capabilities, and compliance with regulatory norms.
- Approval and Issuance of License
- If satisfied, the RBI will grant the Certificate of Registration (CoR) to operate as an NBFC.
Post-Registration Compliance
- Regular Reporting: NBFCs must regularly submit various financial returns and reports to the RBI.
- Statutory Audits: Conduct annual statutory audits and submit audited financial statements.
- Regulatory Compliance: Ensure continuous compliance with all RBI regulations and guidelines.
Importance of NBFC Registration
- Legal Operation: Enables the company to operate legally as a financial institution.
- Regulatory Supervision: Ensures the company adheres to financial and operational standards set by the RBI.
- Consumer Trust: Builds trust and credibility among customers and investors.
Conclusion
Registering as an NBFC in India involves a rigorous process governed by the RBI. Ensuring compliance with all regulatory requirements and maintaining transparency in financial operations is crucial for obtaining and retaining the NBFC license. Following the steps outlined above will help streamline the registration process and establish your company as a recognized non-banking financial institution.