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At Taxhint Advisors We Offer's NBFC Registration

We provide expert consultancy for company registration, GST, ITR filing, and FSSAI certifications, ensuring seamless legal compliance.

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N.B.F.C Registration

A Non-Banking Financial Company (NBFC) is a business entity that is registered under the Companies Act, 1956/2013. Its activities include lending and advances, purchasing shares, stocks, bonds, debentures, and other marketable securities issued by the government or local authority, as well as leasing, hire-purchase, insurance, and chit business. However, this definition excludes any institution whose primary business is engaged in agriculture, industry, the purchase or sale of any goods (other than securities), the provision of any services, or the sale, purchase, or construction of real estate.

Features of NBFC

The NBFCs are allowed to accept/renew public deposits for a minimum period of 12 months and maximum period of 60 months. They cannot accept deposits repayable on demand.

NBFCs cannot offer interest rates higher than the ceiling rate prescribed by RBI from time to time. The present ceiling is 12.5 per cent per annum. The interest may be paid or compounded at rests not shorter than monthly rests.

NBFCs cannot offer gifts/incentives or any other additional benefit to the depositors.

NBFCs (except certain AFCs) should have minimum investment grade credit rating.

NBFC Registration

Types Of N.B.F.C Registration

In India, Non-Banking Financial Companies (NBFCs) are categorized into different types based on their activities, liabilities, and other factors. Here’s an overview of the types of NBFC registrations in India:

Asset Finance Company()Afc

An AFC primarily finances physical assets such as automobiles and machinery. At least 60% of its total assets are devoted to financing these types of assets.

Investment Cpmpany(IC)

An Investment Company focuses on investing in securities, including shares, stocks, bonds, and debentures, with the primary aim of earning returns from these investments.

Housing Finance Company

An HFC is focused on providing loans for purchasing, constructing, or renovating residential properties, thereby supporting the housing sector.

Loan Company (LC)

A Loan Company provides loans and advances that are not related to asset financing, catering to various financial needs of individuals and businesses.

Micro Finance Institution (MFI)

An MFI offers small loans and other financial services to low-income or underserved populations, typically focusing on rural or economically disadvantaged areas.

Infrastructure Finance Company (IFC):

An IFC is engaged in financing infrastructure projects. It must have at least 75% of its total assets in the form of infrastructure loans.

Core Investment Company (CIC-ND-SI):

A CIC holds equity investments in group companies and is not involved in trading of these securities. It mainly acts as a holding company.

Mortgage Guarantee Company (MGC):

An MGC provides guarantees for mortgage loans, helping to reduce the risk for lenders in the housing finance sector.

Peer to Peer Lending Platform (P2P):

A P2P platform connects individual borrowers and lenders directly through an online platform, facilitating personal loans without traditional banking intermediaries.

Eligibility Criteria to Apply for NBFC Registration

The eligibility criteria that applicants seeking NBFC registration must fulfil include the following:

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    A minimum net owned fund (NOF) of INR 10 crore is required of all NBFCs, including Investment and Credit Companies (NBFC-ICC), Micro Finance Institutions (NBFC-MFI), and Factors (NBFC-Factor), in accordance with an RBI requirement.
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    A minimum of ten years of experience in retail, risk, or credit management at a bank is required for one-third of the management.
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    A compelling business strategy that clearly states the company's goal of serving the general public.
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    The application business, its directors, owners, or affiliated businesses must all have a spotless credit history free of loan default records.
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    According to the Companies Act of 2013, the applicant must be registered as a private or public limited company.

Documents Required for NBFC Registration in India

Entities applying to obtain NBFC registration in India are required to submit the following documents:

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    PAN Card
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    Bank account with a minimum paid-up equity share capital of INR 10 crores
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    Director and Shareholder KYC
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    Details of the professional backgrounds of directors and shareholders
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    Net worth of directors and shareholders – certified by the CA
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    Confidential reports from bankers regarding shareholders and directors
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    Duly attested highest education certificate copy
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    Shareholders' and directors’ credit reports
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    Capital Structure of the Company – Certified by the CA
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    Employment certificates and business experience certificates for all entities, including directorial employment history
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    Banker report that confirms INR 10 crores Fixed deposit in the bank account of the NBFC company

NBFC Registration Benefits

Business entities that meet the required NBFC compliances can leverage the following benefits:

  • ➔ Permitted by law to provide their clients loans, including NBFC business loans.
  • ➔ Manage short-term funding demands and liquidity through money market instruments and short-term financial institutions.
  • ➔ Participate in wealth management schemes such as share and stock portfolios.
  • ➔ Make significant financial investments in numerous projects across the nation.
  • ➔ Offer more technologically advanced and diverse digital services compared to traditional banking institutions.

Advantages of NBFC Company Registration in India

Registering a Non-Banking Financial Company (NBFC) in India offers several benefits, making it a lucrative business opportunity for financial service providers. Here are the key advantages:

1. Financial Inclusion & Wider Market Reach

  • NBFCs extend financial services to individuals and businesses that do not have access to traditional banks.
  • They cater to rural, semi-urban, and unbanked segments, contributing to financial inclusion.

2. Lower Compliance Requirements

  • Compared to traditional banks, NBFCs face fewer regulatory requirements under the Reserve Bank of India (RBI).
  • Compliance with RBI norms is easier and more flexible, allowing for quicker setup and operations.

3. Diverse Range of Financial Services

  • NBFCs can offer personal loans, business loans, gold loans, asset financing, microfinance, housing loans, and investment solutions.
  • They can customize their financial products according to market needs.

4. Higher Profit Margins & Scalability

  • Since NBFCs have fewer restrictions on interest rates, they can earn higher profits compared to banks.
  • NBFCs can scale their operations quickly through digital platforms and fintech solutions.

5. Easier Loan Disbursement & Less Stringent Credit Requirements

  • Quicker loan approvals and disbursements with minimal documentation compared to banks.
  • NBFCs serve individuals, startups, and MSMEs who may not have a strong credit history.

6. Low Cost of Operation

  • Unlike banks, NBFCs do not require large physical infrastructure (branches) to operate, reducing operational costs.
  • Many NBFCs function entirely through digital lending platforms and online services.

7. Flexibility in Investment & Funding Options

  • NBFCs attract foreign direct investment (FDI) up to 100%, providing growth opportunities.
  • They can also borrow funds from banks, investors, and financial institutions for business expansion.

8. Contribution to Economic Growth

  • NBFCs help in funding infrastructure, real estate, and industries, contributing to the country’s economic development.
  • They provide job opportunities in the financial sector.

NBFC Registration by State

NBFC Registration by City

FAQ

Frequently Asked Questions

Welcome to our NBFC Company Registration FAQs! Here, we address common queries related to the process of registering a Non-Banking Financial Company (NBFC). Whether you’re a first-time entrepreneur or seeking to expand your business, our goal is to guide you smoothly through the registration procedure, compliance requirements, and documentation. Browse through the questions below to find clear and concise answers, and don’t hesitate to contact us for personalized assistance in getting your NBFC up and running.

The process for NBFC company registration involves incorporating the company under the Companies Act, obtaining a Certificate of Incorporation, and then applying for an NBFC license from the RBI.

The NBFC company incorporation process includes choosing a name, registering the company under the Companies Act, and obtaining a Certificate of Incorporation from the RoC.

The procedure for obtaining an NBFC license from the RBI involves submitting an application with necessary documents, including financials and business plans, and meeting RBI’s capital and compliance requirements.

To apply for an NBFC license, the company must submit an application to the RBI, along with documents like financial statements, business plans, and comply with capital requirements.

Unlike banks, NBFCs cannot accept demand deposits or issue cheques. They focus more on lending, investments, and asset management services.

NBFCs must comply with RBI norms, including periodic financial reporting, adherence to capital adequacy requirements, and ensuring customer transparency.

A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 2013, engaged in financial activities such as lending, investment, asset financing, or other financial services but does not hold a banking license.

NBFCs provide financial services similar to banks but cannot accept demand deposits, issue checks drawn on themselves, or be part of the payment and settlement system.

Yes, 100% FDI is allowed in NBFCs under the automatic route in certain financial services. However, they must meet the minimum capitalization norms specified by the RBI.

Operating as an NBFC without an RBI license is illegal and may lead to penalties, fines, or criminal proceedings against the company and its directors.

NBFC registration with RBI typically takes 3 to 6 months, depending on compliance and document verification.