Hello everyone,
Plz tell me whether business of auto finance is under NBFC activites. My client wants to incorporate a pvt ltd company For doing above business in small scale. Whether it is necessary to take registration from RBI. plz also provide me a draft MOA for auto finance business.
Thanks in advance
If the co's financial assets forms more than 50% of total assets or if the financial income forms more than 50% of the total income then it's termed as NBFC.
Dear Shubha
Well, as per RBI FAQs on NBFCs , following are different types of NBFCs:
i. Equipment leasing company;
ii. Hire-purchase company;
iii. Loan company;
iv. Investment company;
Auto Finanace is basically a loan company, therefore it should be registered with RBI.
In terms of Section 45-IA of the RBI Act, 1934, it is mandatory that every NBFC should be registered with RBI to commence or carry on any business of non-banking financial institution as defined in clause (a) ofSection 45 I of the RBI Act, 1934.
A company incorporated under the Companies Act, 1956 and desirous of commencing business of nonbanking financial institution as defined under Section 45 I(a) of the RBI Act, 1934 should have a minimum net owned fund of Rs 25lakh (raised to Rs 200 lakh w.e.f April 21, 1999).
The company is required to submit its application for registration in the prescribed format alongwith necessary documents for Bank’s consideration. The Bank issues Certificate of Registration after satisfying itself that the conditions asenumerated in Section 45-IA of the RBI Act, 1934 are satisfied.
Please find attached herewith the FAQs on NBFCs for your kind perusal.
CAclubindia
