NBFC Registration
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About NBFC Registration
A Non-Banking Financial Company (NBFC) is a financial institution in India that provides banking services without meeting the legal definition of a bank. They are involved in lending, asset financing, and investment activities but do not have a banking license. NBFCs are regulated by the Reserve Bank of India (RBI) and are crucial in providing credit to various sectors of the economy.
Services included in NBFCs:
- Loans and Advances: Personal loans, business loans, and microfinance.
- Asset Financing: Leasing, hire purchase, and vehicle financing.
- Investment Services: Managing and investing in securities.
- Insurance: Distribution and sale of insurance products.
- Wealth Management: Financial planning and advisory services.
- Chit Funds: Savings schemes and collective investment plans.
why choose NBFC?
Choosing a Non-Banking Financial Company (NBFC) can offer several advantages over traditional banks, including:
- Flexible Loan Options: NBFCs often provide more flexible loan products and repayment terms tailored to individual needs.
- Easier Access to Credit: They are known for quicker loan approval processes and less stringent eligibility criteria, making it easier for individuals and small businesses to access credit.
- Personalized Services: NBFCs typically offer more personalized customer service and relationship management.
- Innovative Financial Products: They often innovate with diverse financial products, such as microfinance and asset-backed lending, catering to niche markets and underserved sectors.
- Less Bureaucracy: With less bureaucratic red tape compared to traditional banks, NBFCs can provide faster decision-making and disbursal of funds.
By choosing an NBFC, you can benefit from a range of customized financial solutions that may not be readily available through conventional banking channels.
process for registering an NBFC
- Incorporate the Company: Register your company under the Companies Act, 2013 as either a Private Limited or Public Limited Company.
- Minimum Capital Requirement: Ensure your company has a minimum net owned fund of ₹2 crore.
- Prepare Necessary Documents: Gather required documents, including a business plan, company incorporation certificate, board resolution, and KYC details of directors.
- Submit Application: Apply online through the Reserve Bank of India (RBI) website using the COSMOS application.
- Pay the Fees: Pay the applicable registration fees as specified by the RBI.
- Submit Physical Copies: Send hard copies of the application and supporting documents to the regional office of the RBI.
- RBI Review: The RBI reviews your application and may request additional information or documents.
- Grant of License: Once the application is approved, the RBI issues a Certificate of Registration, allowing you to operate as an NBFC.
Benefits of Registering an NBFC:
- Access to Diverse Financial Services: NBFCs can offer a wide range of financial products, including loans, asset financing, and investment services, providing multiple revenue streams.
- Increased Flexibility: NBFCs operate with more flexibility compared to traditional banks, allowing for innovative financial solutions and quicker decision-making.
- Target Niche Markets: They can cater to underserved sectors and niche markets, such as microfinance and small businesses, which are often overlooked by traditional banks.
- Regulatory Oversight: While regulated by the RBI, NBFCs face fewer regulatory hurdles than banks, making it easier to adapt and grow.
- Customer-Centric Approach: NBFCs can offer personalized and customer-focused services, enhancing customer satisfaction and loyalty.
- Contribution to Economic Growth: By providing credit to various sectors, NBFCs play a crucial role in promoting economic development and financial inclusion.
- Higher Profit Margins: Due to their operational flexibility and innovative product offerings, NBFCs often enjoy higher profit margins compared to traditional banking institutions.
Documents Required for Registering an NBFC:
- Certificate of Incorporation of the company.
- Memorandum of Association (MOA) and Articles of Association (AOA).
- Audited balance sheet and profit & loss statement of the company for the last three years
- Net worth certificate of the directors and shareholders.
- Telugu Name Board Photo of the Business Premises
- PAN and Aadhaar cards of all directors and shareholders.
- Passport-size photographs of all directors.
- Address proof of the registered office (e.g., utility bill, rental agreement).
Registration Duration
The registration process for an NBFC typically takes around 90 to 120 days from the submission of the complete application to the Reserve Bank of India (RBI). This duration includes the review and verification of all submitted documents and may vary based on the specific requirements or additional information requested by the RBI. Ensuring all documentation is accurate and complete can help expedite the process.
