NBFC Registration

Non-Banking Financial Company (NBFC) is a company registered under the Companies Act of 2013, which is engaged in the business of providing loans and advances, acquiring shares/stocks/bonds/debentures/securities issued by the government or a local authority, or other marketable securities of a similar nature, leasing, hire-purchase, insurance business, and chit business.

However, NBFCs do not include institutions whose primary business is agriculture, industrial activity, the purchase or sale of goods (other than securities), the provision of services, or the sale/purchase/construction of immovable property.

Furthermore, a Non-Banking Financial Company is a company whose primary business is to obtain deposits under any scheme of arrangement in a lump sum or instalments through contributions or in any other way (like Residuary Non-Banking Company). As a result, any non-banking institution that wishes to engage in such activities should apply for NBFC Registration.

Role and Functions of an NBFC
  • To develop sectors like Infrastructure, Education and MSMEs;
  • To assist in wealth creation;
  • To generate substantial employment;
  • To provide financial assistance to the economically weaker section of the society;
  • Faster processing loan;
  • Digital platform to offer loans using advanced technology;
  • To assist in the economic development of the country;
  • To contribute to the state exchequer;
  • To provide specialised credit;
  • To help in the growth of the financial market.

Documents required for NBFC Registration
  • Company Incorporation Certificate;
  • Detailed information on management along with company brochure;
  • Copy of PAN/Corporate Identity Number (CIN) of the company;
  • Documents of the location/address;
  • A Certified copy of the Memorandum of Association & Articles of Association;
  • List of Directors' profiles which should be duly signed;
  • Qualification certificate of directors as well as their experience certificate;
  • CIBIL/credit reports of the Directors of the Company;
  • Board resolution on ‘Fair Practices Code’ and a certified copy of the same;
  • Certificate issued from the statutory auditor declaring that the company doesn’t hold any public deposit and does not accept it;
  • Certificate specifying owned funds on the date of the application from a Statutory Auditor;
  • Shareholder KYC, CIBIL report, ITR and banker report;
  • Furnish information on the bank account, balances, loans, credits, etc.;
  • Audited balance sheet as well as P&L statement with the directors and auditor’s report of the last three years;
  • Self-certified copy of bank statement and ITR;
Advantages of NBFC Registration in India

In India, the advantages of an NBFC Registration are:

  • Saves Time and Cost: In contrast to small banks, the process of incorporating an NBFC is much simpler. Opening a bank involves a large amount of capital, time and cost, whereas the same is not in the case of an NBFC. One just needs the assistance of a good NBFC consultant with prior experience to obtain NBFC Registration in India.
  • Easy Recovery of Loan: NBFCs work systematically and offer customised loan products with achievable repayments. It becomes a convenient process for the borrowers as they can repay the loan amount quickly within the prescribed time period.
  • Economic Growth: Businesses and individuals are looking for an easy and reliable source of credit for their financial requirements. NBFCs provide affordable and secure credit facilities to an unserved market for their personal and business-related credit requirements. Therefore, NBFCs have contributed to the country's economic growth by providing financial freedom to MSMEs, self-employed professionals and individuals.
  • Trading Money Market: NBFCs serve the benefits of trading in money market instruments.
  • Provide Multiple Choices: Due to technological advancement, NBFCs are providing multiple choices to reach a huge audience at a quicker step. Non-Banking Financial Company covers both the large businessperson & small sectors by providing them multiple choices to avail themselves the credit facilities.
  • Allowed FDI: Under NBFC, up to 100%, FDI (Foreign Direct Investment) is also an amazing advantage of NBFC Registration. Non-Banking Financial Companies are the largest propellants of starting finance in the country. Also, the financing process is faster & easier compared to Banks.
  • Give Loans to Poor Credit Scorers: Generally, banks check the credit score first and in case of a poor credit score, the bank rejects the loan application. However, NBFCs provides loan to people having less credit score.
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