With a Non banking Financial Company (NBFC), you can provide some services akin to a bank without drowning in the complications that come with them. However, before you can begin, you need the approval of RBI and the Ministry of Corporate Affairs in.
The Ministry of Corporate Affairs will issue you a Certificate of incorporation so that you can establish your NBFC and RBI will issue you an NBFC license so that you can begin business operations.
Our article will provide you with all the information you must have about NBFC license in India.
Why you should opt for NBFC license in India?
One question that always seems to bother most is why. Banks already have people’s trust when it comes to financial services, then what’s the point of starting a private, and probably small scale financial company. Well, there are advantages of NBFC license that far outclass banks at any day: Read More: Corporate Agent License
- Cost and time saving: Compared to small banks, the procedure to incorporate an NBFC is much simpler. From capital requirements to time and cost, NBFCs cost far less than a bank. Thus, if you have a good consultant at your side, you can start a non banking financial company far quicker than you would a bank.
- Recovering loan is easy: Unlike traditional banks, NBFCs have a choice to dip in to tech-oriented ways to provide customer loan products with payments that customers can achieve. Therefore, borrowers are now seeing an NBFC as a more viable option when it comes to loans.
- It promotes economic growth in India: We live in an age of privatization where the government is slowly moving back their hands from many ventures – banks are one of them. Therefore, if you open an NBFC today, there is a chance that you’ll become part of India’s economic growth later.
What are the different functions of an NBFC?
You can summarize the roles and functions of an NBFC in India as follows:
- It promotes the development of infrastructure, MSMEs and education
- Promoting customized loans, it facilitates wealth creation.
- Generating more employment opportunities in India
- Aiding weaker section of the society with financial assistance
- Assisting in promoting economic development of the country.
- Contributing to state exchequer
- Providing specialize credit and
- Assisting in growth of the financial market.
What conditions RBI imposes to issue NBFC license?
The Reserve bank of India imposes the following conditions on those it issues the NBFC license:
- NBFC Banking license is only for those who are capable of paying the full claims to their investors.
- The licensee won’t have the permission to act in any way that can violate the rights of Indian citizens
- All the members of the board of an NBFC should be in line with the general interest of the public
- The Non Banking Financial companies must have adequate earning potential
- Financial sector should’ve perceive the NBFC with unfavourable eyes.
- NBFC should work in a way consistent to monetary stability, economic growth and other regulatory conditions of the Reserve Bank of India.
What are the NBFC registration criteria regarding Minimum capital requirement?
When it comes to meeting the minimum capital requirement, the RBI expects the NBFC to meet the following eligibility criteria:
- The net worth of the applicant NBFC should be at least INR 2 Crore
- Applicant must hold the INR 2 Crore of funds at the time of registration
- The invested capital should have a tax associated with it. RBI expects the NBFC to provide the proof of that tax’s payment.
- The minimum capital should be free from any defects. Read More: Insurance Marketing Firm
What are the documents required for NBFC license?
The documents required for NBFC license are as follows:
- KYC documents of all the shareholders of the company
- Business profile of all the directors and shareholders of the company
- Banker’s report showing the net worth of the company
- Credit rating report of all the directors
- Education qualification certificate of all the company’s directors
- Income tax returns
- Business plan for the next 3 to 5 years.
How to get NBFC license from RBI?
Once you’ve met the eligibility criteria and collected all the requisite documents, follow the steps below to apply for NBFC license from RBI:
- Incorporate your company under Companies Act, 2013
- Arrange for INR 2 Crore to meet the minimum capital requirements
- Create an FC and submit INR 2 Crore in that
- Create a file and populate it with all the requisite documents.
- Once you’ve create the file, fill the NBFC license application form and give it to the RBI along with the file via online mode.
- Once you’ve submitted the online documents, the RBI might ask you to provide offline documents as well. So, prepare a separate physical file of the same.
- RBI, upon receiving your documents, will start to scrutinize them. If it finds them satisfy the RBI regulations and your business to be beneficial for country’s economic growth, you’ll obtain NBFC license.
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A Non banking Financial Company is a way for you to penetrate the financial domain in a big way. get NBFC license to get started. If you want any assistance in this regard, feel free to reach out to Registrationwala.
If you want more help regarding nbfc license or registration then contact us. Read this blog for everything that you need to know about NBFC license in India. For further details, be sure to contact Registrationwala.