How to register NBFC?

Non-Banking Financial Companies (NBFCs) have been making important contributions to India's economy. However, the Reserve Bank of India (RBI) still controls the working of all NBFCs under the framework of RBI Act, 1934 and directions issued by it from time to time.

- Isha Malik (Company Secretary, MUDS Management Pvt Ltd)

Every NBFC, in order to carry out its operations, is required to obtain license from RBI. In other words, any establishment desirous of starting the business of NBFCs shall apply to RBI for obtaining license to operate as NBFCs, and must be registered with RBI as an NBFC. It is, therefore, important to know as to how to register an NBFC.

Knowhow #1: Requirements for Registration with RBI -

A company incorporated under the Companies Act, 1956/2013 and desirous of starting a business of NBFI as defined under Section 45 I (a) of the RBI Act, 1934 should have compliance with the following:

1. It should be a company registered under Section 3 of the companies Act, 1956
2. It should have a minimum net owned fund of Rs. 200 lakh.

However, in terms of the powers given to the Bank, to obviate dual regulation, certain categories of NBFCs which are regulated by other regulators are exempted from the requirement of registration with RBI

Knowhow #2: Procedure for application to the RBI for Registration -

• Step 1: The applicant NBFC is required to apply online and also submit a physical copy of the application along with the necessary documents to the Regional Office of the RBI

o The application can be submitted online by accessing RBI's secured website https://cosmos.rbi.org.in.

o At this stage, the applicant company will not need to log on to the COSMOS application and hence user ids are not needed.

o The applicant company can click on 'CLICK' for Company Registration on the login page of the COSMOS Application. A window showing the Excel application form available for download would be displayed. The applicant NBFC can then download suitable application form.

• Step 2: After uploading the filled-in application form, the company would get a Company Application Reference Number.

• Step 3: Thereafter, the company has to submit the hard copy of the application form (indicating the online Company Application Reference Number) along with the supporting documents, to the concerned Regional Office. The company can check the status of the application online.

MUDS offers 360-degree services of NBFC Registration and have served top corporates. From my 9 years experience in this industry I can confidently say- While the process is simple, it may become extremely complicated and time consuming if the company secretary hired is not competent and experienced. !

- Divya Gupta (Market Analyst, MUDS Management Pvt Ltd)

Knowhow #3: Essential documents required to be submitted to the RBI -

• The application form and an indicative checklist of the documents required to be submitted along with the application is available at www.rbi.org.in → Site Map → NBFC List → Forms/ Returns.

• Recently, the process of making an application has become a lot easier. In order to make the registration process of new NBFCs smoother and hassle-free, the RBI, since 2016, has revised the application form for registration of NBFCs and the checklist of documents to be submitted.

• The number of documents to be submitted by NBFC applicants has been reduced from the existing set of 45 documents to seven to eight in the revised process.

• RBI has decided to put the system on fast track for non-deposit taking companies (NBFC-ND applicants) and reduce the number of documents required by four-fifth to improve efficiency.

• The regulator has allowed non-deposit taking NBFCs to apply separately so that the processing of them can be fast-tracked. As these companies will not have access to public funds and will not have customer interface, they will be subjected to less intensive scrutiny/ due diligence.

• However, the certificate of registration issued to the NBFC-ND companies will be conditional. These companies will be prohibited from accessing public funds and having customer interface. In case these companies intend to avail public funds or intend to have customer interface in the future, they are required to take fresh approval from the RBI.

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