Should it be registered as nbfc ?

176 views 3 replies

Ranvijay

Executive

23 Points Joined December 2016

A company is offering short-term, short-amount credit to users to buy daily essentials i.e. Groceries, Medicine, Staples etc. through its tied up merchants or vendors. The buyer has the facility to pay directly to the merchant/vendor or the company within 14 days of the transaction. If the buyer is directly paying to the company after or within 14 days of the transaction, still the credit arranging company will transfer the funds to the merchants or vendors from where the buyer had bought the goods & services. Here the revenue model of the company is based on the sales volume of the tied-up merchants or vendors. Will it be mandatory to register such type of company under NBFC. Thanks Ranvijay

Replies (3)

Kumud prasad

Practicing CS

216 Points Joined January 2014

Ranvijay ji,

As per my view registration is required.

The word "lending in any manner " used in the meaning of NBFC covered your business also.

Ranvijay

Executive

23 Points Joined December 2016

Hi Mr. Prasad,

I saw somewhere on RBI Website " Financial activity as principal business is when a company's financial assets constitute more than 50 per cent of the total assets and income from financial assets constitute more than 50 per cent of the gross income. A company which fulfils both these criteria will be registered as NBFC by RBI.".

As the company's core revenue is from Sales commission from tied-up merchants, not on Interest on credit facility offered to buyers. Do you think our revenue will constitute more than 50% of our Gross Income.

I would also like to know, being an aggregator (we don't have any assets) how we fall into 50% of financial assets out of 100% total assets.

BTW Thanks for coming forward and helping me.

Ranvijay

Kumud prasad

Practicing CS

216 Points Joined January 2014

Ranvijay Ji,

yes, If your company doesnot fullfill the requirement of "Principal Business" ( 50-50 test) then registration not required i.e. company is doing such lending in a minor scale.

means you have NIL ASSET AND NIL LIABILITIES?

After seeing financial statement we can help you whether revenue and financial asset consitute 50% or not.