Non-Banking Financial Companies (NBFCs) are financial institutions that offer a wide range of banking services, but do not hold a banking license. They play a pivotal role in the financial ecosystem by providing credit to various sectors, especially underserved segments. If you’re looking to register an NBFC in India, here’s a comprehensive guide to the process and the legal requirements.

Types of NBFCs in India

NBFCs can be broadly categorized into several types based on their activities:

1. Asset Finance Company (AFC)
2. Loan Company (LC)
3. Investment Company (IC)
4. Infrastructure Finance Company (IFC)
5. Micro Finance Institution (MFI)
6. Housing Finance Company (HFC)

Steps to Register an NBFC

1. Incorporate a Company: The first step is to incorporate a Private Limited or Public Limited Company under the Companies Act, 2013. This involves obtaining the Certificate of Incorporation from the Registrar of Companies (ROC).
2. Meet Minimum Capital Requirement: Ensure that the company has a minimum net owned fund (NOF) of ₹2 crores (₹5 crores for an NBFC-MFI).
3. Open a Bank Account: Deposit the required NOF in a bank account and obtain a certificate from the bank confirming the deposit.
4. Prepare the Documents: Gather all the necessary documents for the NBFC registration application (detailed below).
5. Apply for RBI License: Submit an online application for the NBFC license through the Reserve Bank of India’s official website.
6. Submit Physical Application: Send a physical copy of the application along with the required documents to the RBI’s regional office.
7. Inspection and Verification: The RBI will conduct a thorough inspection and verification of the documents and compliance with the eligibility criteria.
8. Issuance of License: Upon successful verification, the RBI will issue the Certificate of Registration (CoR), allowing the company to operate as an NBFC.

Legal Requirements and Documents

The following documents are required for NBFC registration in India:

1. Incorporation Documents:
   • Certificate of Incorporation
   • Memorandum of Association (MOA)
   • Articles of Association (AOA)
2. KYC Documents:
   • PAN Card of the company
   • PAN Card, Aadhaar Card, Passport, or Voter ID of directors and shareholders
   • Address proof (Electricity bill, Water bill, etc.) of the registered office
3. Financial Documents:
   • Bank account statement showing the deposit of the NOF
   • Audited financial statements of the company
4. Board Resolution: Authorizing the registration and operation of the NBFC.
5. Business Plan: Detailed business plan including future projections, organizational structure, and income analysis.
6. Experience Certificate: For at least one director, certifying experience in financial services.
7. Net Worth Certificate: From a Chartered Accountant, certifying the company’s net worth.
8. RBI Compliance Documents: Documents evidencing compliance with RBI guidelines and norms.

Conclusion

Registering an NBFC in India is a meticulous process that requires adherence to regulatory guidelines and thorough documentation. By following the steps outlined above and ensuring compliance with legal requirements, you can successfully establish an NBFC and contribute to the financial sector.