Register a “Non-banking financial company”
NBFCs or Non-Banking Financial Companies are registered under the Companies Act 1956/Companies Act 2013. Though these do not possess a banking license, yet they are involved in various financial services. Some of the services include:
|NBFCs registered with RBI
|Regulation, supervision, surveillance and enforcement under RBI
|NBFC regulated by other regulators
|Depends on the type of institution
|Housing Finance Institutions
|National Housing Bank
|Merchant Banking Company/Venture Capital Fund Company/Stock Broking/Collective Investment Schemes (CIS)
|Securities Exchange Board of India
|Nidhi Companies and Mutual Benefit Companies
|Ministry of Corporate Affairs
|Chit Fund Companies
|Insurance Regulatory and Development Authority
|Non-Banking Non-Finance Companies
|Regulation, supervision, surveillance and enforcement under the Companies Act 1956.
The classification based on authorization to take deposits:
The classification based on their activities:
If the primary business of the company is to finance the assets of a firm, such as machines, automobiles, generators, material equipment, industrial machines, etc., then it is called an “Asset Finance Company”.
These companies deal primarily in securities.
The main business for these companies is to grant loans and advances. These loans are not for asset acquisition, but other purposes, such as working capital finance, etc.
The companies falling under this category possess at least Rs.300 Crores and deploy 75% of their total assets in infrastructure loans. These companies must also have a credit rating A or above and CRAR of 15%
In case a company owns assets worth Rs.100 crores or more and has deployed 90% of it’s assets in debt instruments or loans in group companies, then it is considered as CIS-ND-SI. Of the 100%, 90% should be invested in equity shares.
The investment of these companies is primarily in the infrastructure sector. These funds are crucial, as it is difficult to obtain funds of such amounts.
You could either register this as a trust or a company. In case it’s a trust, then it would be a mutual fund which comes under SEBI regulations. It will then be called “IDF-MF”. And if it is a company, then it would be under RBI regulations. Then it will be called as IDF-NBFC.
This is a type of company, whose main aim is to enable it’s members to pool their money with a pre-calculated investment objective. The sources of these funds are share capital & deposits from it’s members and the general public.
This is a non-deposit taking NBFC that has at least 85% of it’s assets in the form of microfinance.
In the Memorandum of Association of these companies, there is a clause of housing finance mentioned. These provide mid-term capital loans to individuals or firms. Due to their less stringent regulations and flexibility, these companies are a much better alternative to commercial banks.
These are the business companies which conducts the business of acquisition of securities and shares. These companies hold 90% of their assets in the form of bonds, equity shares, and preference shares. Also, these companies need to invest at least 60% in equity shares.
The government charges are “Rs.3,50,000” approx. And adding this to the professional fee could bring the total amount to Rs.15 lakh. But, if you use our services, it would cost you Rs.6,00,000 + Government fee for the registration.
Significant documents required for an NBFC Registration in India, which are as follows:
For a company to be considered an NBFC, it should be registered as per the rules, regulations, and provisions mentioned in the Companies Act 2013. The minimum amount of fund owned by an NBFC should be at least Rs.2 crores and this shouldn’t be borrowed fund. (This limit is different in other cases like that of specialized NBFCs:- “NBFC-MFIs, NBFC Factors, CICs, as it is decided on the kind of NBFC”). Any gift from spouse comes under owned-funds.
At least 1/3rd of the directors must have some experience in finance.
Also, there must be a detailed plan for the next 5 years.
NBFCs as sponsors of IDF-MF
For a company to be considered as an “IDF-MF”, the minimum owned fund should be at least Rs.3 crores, CRAR of 15% and NPA not more than 3% of the net advances. Along with this, the company should be operational for the last 5 years and profitable in the last 3 years.