NBFC Registration

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NBFC Registration Process

Step 1
Prepare documentation
Step 2
Fill the application form
Step 3
Submit the
application form
Step 4
Wait for processing
Step 5
Process complete

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NBFC stands for Non-Banking Financial Company. In India, NBFC registration refers to the process of legally incorporating and obtaining a license to operate as a non-banking financial institution. NBFCs are financial entities that provide various financial services and products similar to traditional banks, but they do not hold a banking license and cannot accept demand deposits from the public.

NBFCs play a significant role in the Indian financial system by extending credit, facilitating investment, mobilizing savings, and offering various financial services to different sectors of the economy. They cater to the financial needs of individuals, businesses, and institutions that may have limited access to banking services or do not meet the criteria to avail banking facilities.

Documents Required For NBFC registration:

  • 1. Incorporation Documents:
    Certificate of Incorporation of the company need to be submitted.
    Memorandum of Association (MOA) and Articles of Association (AOA) are need to be prepared and submitted.
    Board Resolution authorizing the application for NBFC registration.
  • 2. Capital Requirement:
    Bank statements reflecting the capital investment amount as per the prescribed minimum capital requirement set by the RBI.
    Auditor's certificate confirming the capital contribution.
  • 3. KYC Documents:
    Identity proof and address proof of the promoters, directors, and shareholders.
    PAN cards of the promoters, directors, and shareholders.
    Photographs of the promoters, directors, and shareholders.
    Residential address proof of the registered office.
  • 4. ABusiness Plan:
    Detailed business plan outlining the nature of financial activities, target market, products and services, operational strategies, and projected financials.
    Market analysis and feasibility study.
  • 5. Fit and Proper Criteria:

    Declarations and affidavits from directors, shareholders, and key management personnel stating their fit and proper status as per RBI guidelines.

  • 6. Organizational Structure:
    Organizational chart depicting the management structure and key personnel.
    Curriculum vitae (CV) or resumes of the directors and key management personnel.
  • 7. Compliance Documents:
    Declarations confirming compliance with the RBI regulations and guidelines.
    An Anti-Money Laundering (AML) and Know Your Customer (KYC) policy framework must be present in the documents.
    An efficient internal control systems and risk management policies.
  • 8. Financial Documents:
    Audited financial statements of the promoters, directors, and holding companies for the last three years (if applicable).
    Net worth certificate of the promoters, directors, and shareholders.
    Business projections for the next three to five years should be there while filling the documents.
  • 9. Miscellaneous Documents:
    Undertaking of non-acceptance of public deposits.
    Undertaking of adherence to the prudential norms and regulations.
    Any other documents as specified by the RBI.

    • It's important to note that the document requirements may vary based on the specific type of NBFC and the regulatory guidelines issued by the RBI.

NBFC (Non-Banking Financial Company) registration Process:

The steps involved in NBFC (Non-Banking Financial Company) registration in India can vary depending on the specific type of NBFC and the regulatory requirements set by the Reserve Bank of India (RBI). However, here is a general overview of the typical steps involved in the NBFC registration process:

1. Determine the Type of NBFC:

Identify the specific type of NBFC you wish to register, such as Asset Finance Company, Loan Company, Infrastructure Finance Company, Microfinance Institution, etc. This will determine the applicable regulations and requirements.

2. Company Incorporation:

Incorporate a company under the Companies Act, 2013 or convert an existing company into an NBFC, as per the requirements of the RBI. Ensure compliance with the incorporation process and obtain the Certificate of Incorporation.

3. Minimum Capital Requirement:

Ensure that the company meets the minimum capital requirement specified by the RBI for the particular type of NBFC. Maintain the required capital in the company's bank account and obtain a certificate from a chartered accountant confirming the capital infusion.

4. Prepare the Application:

Prepare the application for NBFC registration in the prescribed format as provided by the RBI. Include necessary details and documents as per the regulatory guidelines.

5. Document Submission:

Submit the application along with the required documents to the Regional Office of the RBI or the Central Office of the RBI, depending on the jurisdiction and nature of the NBFC.

6. Background Checks and Verification:

The RBI will conduct a thorough background check on the promoters, directors, and key management personnel of the NBFC. This includes evaluating their financial soundness, integrity, and experience in the financial sector.

7. Compliance with RBI Guidelines:

Ensure compliance with the RBI's regulatory guidelines for NBFCs. This includes adherence to prudential norms, asset classification, capital adequacy, corporate governance, risk management, KYC/AML regulations, and other applicable regulations.

8. Application Processing and Evaluation:

The RBI will evaluate the application and the supporting documents. They may seek clarifications or additional information during the review process.

9. On-site Inspection:

The RBI may conduct an on-site inspection of the registered office and the infrastructure of the NBFC. This is to assess compliance, operational capabilities, and systems.

10. Certificate of Registration:

If the RBI is satisfied with the application and compliance, they will issue the Certificate of Registration as an NBFC. This certificate confirms the legal status of the NBFC and grants authorization to carry out financial activities.

It's important to note that the NBFC registration process can be complex and time-consuming. It is advisable to seek professional assistance from legal and financial experts specializing in NBFC registration to ensure compliance with the regulatory requirements and smooth navigation through the registration process. They can provide guidance, assist in document preparation, and help streamline the application process.

Commonly asked questions regarding NBFC:

  • 01. Why is NBFC registration necessary?

    NBFC registration is necessary to operate as a legally recognized financial institution in compliance with the regulations set by the Reserve Bank of India (RBI). It provides credibility, ensures compliance with regulatory requirements, and builds trust among clients and stakeholders.

  • 02. How many types of NBFCs are present in India?

    There are various types of NBFCs in India, including Asset Finance Company, Loan Company, Infrastructure Finance Company, Microfinance Institution, Core Investment Company, Housing Finance Company, etc. Each type of NBFC has specific activities and regulations associated with it.

  • 03. How long does the NBFC registration process take?

    The NBFC registration process can take several months, as it involves document preparation, submission, background checks, evaluation by the RBI, and potential on-site inspections. The timeline can vary based on the completeness of the application and the RBI's review process.

  • 04. Can an existing company convert into an NBFC?

    Yes, an existing company can convert into an NBFC by fulfilling the prescribed criteria and following the conversion process as per the RBI guidelines. The company needs to meet the eligibility criteria, submit the required documents, and comply with the necessary regulations.