What is NBFC Registration & How to apply for it?

Non-Banking Financial Companies (NBFC) are financial establishments that offer financial services and facilities that a bank usually provides. Registered under the Companies Act, 1956, some of its major business activities are acquisition of shares, stocks, bonds, debentures, securities issued by the Government and it also offers loans and advances.

The first major step in carrying out activities as a Non-Banking Financial Company is NBFC Registration. Without timely registration, the company will not be able to start operating.

Let’s get into the details on how to register for NBFC,

• The applicant must be a registered company according to the provisions of Companies Act 2016 or Companies Act 1956.
• The applicant must engage in the financial activities as per the provisions mentioned in the Act. If the financial flow of the registered company increases to more than 50% the total capital assets that the company owns, the company then receives NBFC Registration.
• The applicant company at the time of making an application for NBFC registration must hold a minimum of Paid up capital fund of Rs 2 Crores. On the other hand, the Foreign Company and the Foreign Investors who are planning to start a NBFC shall maintain paid-up equity capital of Rs 5 Crores.

Following are points to apply for Register NBFC:

• Hire NBFC Registration Consultants

An NBFC Consultant firm must be contacted and a team of members of at least 100 to 150 must be hired that contains professional individuals such as CA, CS, Lawyers, and Senior Level Bankers.

• Create a detailed Business Plan

The business plan must include the following important elements-

1. Founders and Executive Summary
2. Loan Product
3. SWOT Analysis
4. Credit & Risk Model
5. Competitors Analysis
6. Lending Model
7. Financial Forecast

• File an application for Certificate of Registration(COR)

Before filing an application for Certificate of Incorporation, certain important factors must be fulfilled. The first one is including a middle name in the company name, the name of the company must have any one of the mentioned words: Finance, Finserv, Final, Investment, Capital, Fintech, and Leasing etc. A fixed deposit of Rs 2 Crores must be created at a commercial bank. Lastly, the application form must be submitted with the regional department with RBI.

• Establish a Public/Private Limited Company
• Create a business plan and Documentation
• Submit the application on COSMOS
• Send a hard copy of all the documents to the RBI
• Track the status of the application

Source: https://medium.com/@sonu_mallik/what-is-nbfc-registration-how-to-apply-for-it-d2ab0730c433