NBFC REGISTRATION

NBFC’s in India are regulated by the Reserve Bank of India (RBI). As per RBI guidelines, an NBFC cannot carry on non-banking financial business if, a) it does not have a certificate of registration from the bank (except for the NBFC’s who are not regulated by the RBI), and b) it does not have Net Owned Funds of Rs. 2 crore.

An NBFC incorporated under the Companies Act, 1956 or Companies Act, 2013 willing to commence a business of non-banking finance should comply with the following RBI guidelines:
• It must be registered under Section 3 of the Companies Act, 2013 or the Companies Act, 1956
• It should meet the requirement of minimum of Rs. 2 crore of Net Owned Funds (except for NBFC-MFIs, NBFC-Factors and CIC)

Net Owned Funds can be calculated from the last audited balance sheet of the firm. Paid-up Equity Capital, Free Reserves, Share Premium Account Balance, and Capital Reserve will constitute Total Owned Funds. To calculate, Net Owned Funds, deduct Revaluation Reserves, Balance of Accumulated Loss, and the book value of Intangible Assets from Total Owned Funds. If any investment in shares of other NBFC’s or in debentures and shares of subsidiaries and group companies is in excess of 10% of the owned funds will be subtracted from the Net Owned Funds.

Documents Required for NBFC Registration

• Certificate of Company Incorporation.
• Detailed information about the management along with a brochure of the company.
• Documents related to the office location/address
• Certified copy of the Memorandum of Association (MoA) and Articles of Association (AoA).
• List of Directors’ profile duly signed by each director must be attached.
• CIBIL/credit reports of the Directors of the Company are required.
• A copy of the board resolution which certifies that the company has not carried out or stopped NBFC activity and will not carry any until the registration from RBI is granted.
• A board resolution on ‘Fair Practices Code’ is to be passed and a certified copy of the same is to be submitted.
• Certificate issued by the statutory auditor stating that the company is not holding the public deposit and does not accept it as well.
• Certificate specifying owned funds as on the date of the application from the Statutory Auditor is required.
• Information regarding the bank account, balances, loans, credits, etc. is to be furnished.
• If applicable, audited balance sheet and profit and loss statement along with the directors and auditors report of the preceding three years has to be submitted.
• Self-certified copy of the bank statement and Income Tax Returns is required.
• Information detailing the company’s future plan, generally for the next 3 years, along with the projection of balance sheets, cash flow statement and income statement.