Registration Of NBFCs

Registration of NBFCS

An NBFCS (or Non-Banking Financial Company) is a company that identifies under the Companies Act of 1956 or 2013. It is a company that deals with other money related sectors, such as the principal business of lending, leasing, insurance business, investments in shares/stocks/debentures/bonds, hire-purchase, chit business, or receiving any deposits under a particular arrangement or scheme. NBFCS come under RBI, and the classification of NBFCS based on registration with RBI is explained below with the procedure for registration of NBFCS.

Classification Of NBFCS Based On Registration With RBI

The NBFCS are classified into three categories:

1. According to the type of liabilities into Deposit and Non-Deposit accepting NBFCS

2. According to the activities that they perform

3. Non-Deposit accepting NBFCS to the essential and NBFC-NDSI and NBFC-ND

The many NBFCS that come under these categorisations are as follows:

• Infrastructure Debt Fund: Non-Banking Financial Company (IDF-NBFC)

• Asset Finance Company (AFC)

• Investment Company (IC)

• Loan Company (LC)

• Systematically Important Core Investment Company (CIC-ND-SI)

• Non-Banking Financial Company- Factors (NBFC-Factors)

• Mortgage Guarantee Companies (MGC)

• NBFC – Non-Operative Financial Holding Company (NOFHC)

• Infrastructure Finance Company (IFC)

These were the classification of NBFCS based on registration with RBI.

Procedure For Registration Of NBFCS

The process through which you can register with NBFCS is easy to follow. The Company that wants to establish itself with NBFCS needs to submit an application online and deliver a physical copy of that to the Regional Office of the Reserve Bank of India, with the other relevant documents for registration. 

There will not be any need for the registering Company to log on to the COSMOS application during this time, meaning there would be no need for user IDs. The Company can select the “CLICK” button to register their Company, located on the login page of the COSMOS Application. Then, an excel window would pop up showing you the application form, which you can download. Then the registering Company can download the application form (i.e. NBFC or SC/RC) from the website mentioned earlier. Then they are required to fill out all the data and submit it online. The Company would then get a Company Application Reference Number for the registration application you filed online.

After that, to finish up, the physical copy of the application form, which contains the Company Application Reference Number and the other relevant documents, needs to be presented to the Regional Office of the Reserve Bank of India. Then, the registering Company can check their application status from the secured website given above by putting in the Company Application Reference Number or acknowledgement number.

Important Documents Required For NBFC Registration

For completing the procedure for registration of NBFCS, you would need to keep certain documents handy with you, without which you will not be able to register your Company for NBFCS. The document required as mentioned as follows:

• Company Incorporation Certificate

• PAN or CIN (Corporate Identity Number) of the Company

• Office location, address documents

• A copy of the AOA (Articles of Association) and MOA (Memorandum of Association) certified by the concerned authorities

• Copy of bank statements and Income Tax Returns which is self-certified

• A board resolution copy which ensures that the Company has not been indulging in NBFC activity and will not do so unless it gets registered by the RBI

• The board must pass a “Fair Practices Code” resolution, and its certified copy will be submitted.

• The information which tells about the plans of the following three years of the Company, with balance sheet, cash flow statement, and income statement projections

• Certificate from the Statutory Auditor which indicates that neither does the Company hold public deposits, nor does the Company accept it

• A list of the profile of all directors with their signatures on it

• Document with credit reports of all Directors of the Company.

• Certificate from the Statutory Auditor, which specifies funds owned by the Company as on the date of the application

Fees For NBFC Registration

Many fee structures need to be taken care of for NBFCS registration, and they are explained below:

• A fee needs to be paid to the MCA (Ministry of Corporate Affairs) based on the Company’s authorised capital.

• A Fee to Simplified Performa for Incorporating Company electronically (SPICe+)

• A company also needs to pay fees for the MOA (Memorandum of Association) and AOA (Articles of Association), based on the authorisation capital and a few different factors.

• A fee determined earlier needs to be paid to the MCA to get the DIN (Director Identification Numbers).

• A periodic fee is required to generate a DSC (Digital Signature Certificate) for each director.

• Fees are also to be paid to the registrar when you apply.

Which Agency Regulates And Supervises NBFCS

If anyone asks you which agency regulates and supervises NBFCS, you can tell them that it is the Department of Non-Banking Supervision (DNBS). The management and control of the  NBFCS are taken care of by the DNBS, which comes under the regulatory – provisions present in Chapter 3 B and C and Chapter 5 of the 1934 Reserve Bank of India Act.

The DNBS is responsible for many things, such as registration of NBFCs, direction issuance to accept deposits by NBFCs, various category regulations of NBFC, surveilling the sector by supervision through both on and off-site, et cetera. They pay more attention and care to NBFCs that take deposits and the Systematically Important Non-Deposit Accepting Companies. The main aim of the supervision and regulation is to establish three folds, which are:

1. Depositor Protection

2. Consumer Protection

3. Financial Stability

Conclusion

Over the years, NBFCS have become essential financial intermediaries. They have become popular, especially in the retail and small-scale sectors. They have become a necessary part of the financial system of India, which has helped in improving competition and diversification in the financial industry. It is known for spreading risks when economic sufferings arise and are being respected as a complementary part of the banking system.