{"id":5443,"date":"2019-03-18T04:50:07","date_gmt":"2019-03-18T04:50:07","guid":{"rendered":"https:\/\/companyregistrationonline.in\/?p=5443"},"modified":"2020-10-07T10:39:03","modified_gmt":"2020-10-07T10:39:03","slug":"nbfc-compliance","status":"publish","type":"post","link":"https:\/\/companyregistrationonline.in\/blog\/nbfc-compliance\/","title":{"rendered":"NBFC Compliance: what are the requirements as per RBI Act?"},"content":{"rendered":"
According to an RBI report, in 2017,\u00a0Non-Banking Financial Company<\/a>, are performing better than the banks are saddled by bad loans and poor profitability. The realization comes as NBFCs has been the largest net borrowers of funds from the financial system, in a few financial years. There are growth opportunities<\/strong> for NBFCs because they are involved in\u00a0contributing, immensely, to India\u2019s economic growth, despite the issues regarding the NBFCs.<\/p>\n In other words, no Non-banking Financial Company (NBFC<\/strong>) can commence or carry on a business of a non-banking financial institution These financial institutions do not have a banking license but\u00a0offer various banking services<\/strong>, namely:<\/p>\n Their business does<\/strong>\u00a0not<\/strong><\/p>\n As per Section 45-IA of the RBI Act, 1934, to get NBFC compliance for your business, you need to:<\/p>\n (a) get your company registered under this Act,<\/p>\n (b) and have a Net Owned Fund (NOF<\/strong>) of 2 crores, minimum.<\/p>\n These are an important segment of the Indian Financial system, raising funds from the public directly or indirectly and lend them to ultimate spenders. They perform brokering such as accepting deposits, making loans and advances, leasing, hire purchase, etc. The funds raised by such means are then lent to various wholesale and retail traders, small scale industries, self-employed persons.<\/p>\n To protect the interests of the individuals, investors as well as, borrowers, (some NBFC were reportedly charging exorbitant interest rates and\/or using coercive practices to recollect their loan amount), RBI conducts frequent screening and framed new frameworks to address risks, gaps and arbitrage.<\/p>\n In case your business is not registered, then you cannot carry on below activities, without inviting severe penalties:<\/strong><\/p>\n Companies that are non-banking financial activity, without proper registration, can get prosecuted in a court of law. So if the principal business of your organization is lending, investment, or deposit, then it can get penalized or fined.<\/p>\n Even anyone from the public is invited to complain against such an entity. And then the RBI would be taking an appropriate action<\/p>\n Applicant Company must be:<\/p>\n Certain categories of NBFCs which are regulated under other regulators are exempted from obtaining the\u00a0NBFC License<\/a>\u00a0by the RBI, to avoid duplication and unnecessary hassle. These are:<\/p>\n Now, their significance is being recognized as complementary to the traditional banking sector in meeting the credit demand unmet by them. They became ideal for those who do not otherwise qualify for a bank loan or who prefer to do business with non-banks. Investors can build a diversified portfolio of loans by investing small sums across a range of borrowers. Participation of NBFCs in the Insurance Business<\/a>, Gold Loans, Commercial Vehicles & Cars, Micro-finance, etc is incomparable.<\/p>\n You can commence your business only after making NBFC compliance with rules & regulations, as applicable. If your company is engaged in the business of any of the above-mentioned sectors. And it produces a finance flow from that business, more than 50% of the total capital asset of the company for any year, having NBFC License<\/a> is mandatory<\/strong>.\u00a0Only those who have a valid NBFC Registration,<\/strong> in their hands, can accept\/hold<\/strong> public deposits.<\/p>\n RBI conducts frequent screening and is very particular about the maintenance of the required NOF by all NBFCs. Any non-compliance by NBFCs attracts strict action, eventually leading to the revocation of the Registration.<\/p>\n In recent times, the importance of NBFCs has been established to the RBI, and it is making pragmatic moves to regulate this sector. To keep ahead in the NBFC business, use our Advanced Business Knowledge with Tech,\u00a0<\/strong>call now at +91\u00a08750008585<\/span>\u00a0or Email:contact@companyregistrationonline.in<\/a>. To know more about the services we offer, please visit our website company registration online.<\/p>\n Additionally Check:<\/p>\n Non Banking Financial Company \u2013 An Overview<\/a><\/p>\n\n
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Regulations governing NBFC Compliance are:<\/h2>\n
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Preparations to get your NBFC Compliance<\/h2>\n
Basic Rules:<\/strong><\/h3>\n
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The Documents Required for NBFC Compliance according to the Regulations:<\/strong><\/h3>\n
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The online process to get registered:<\/strong><\/h3>\n
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Exempted Companies from NBFC Registration:<\/h2>\n
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Why NBFCs are preferred by the Inexperienced and\/or Rural Public:<\/strong><\/h3>\n
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Conclusion :<\/h2>\n