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NBFC Registration

Non-Banking Financial Companies are considered to be the financial institutions that play a prominent role in Finance sector. These companies are registered under Companies Act, 1956. According to this Act, these companies deal the transactions in terms of loans, advances, acquisition of shares, debentures, stocks, and securities. However, these can be issued by the government or any other local authority. Any marketing and leasing security, insurance business also can issue these types of transactions. It does not involve any direct cash transaction, which does the bank. Any institution that invests on agricultural, industrial activities will not come under NBFC.

NBFCs differ in their functions based on their nbfc registration procedure such as equipment leasing, hire-purchase, loan, and investment companies.

Procedure and Requirements for NBFC Registration

  • Before the company to register in NBFC, it should have registered in RBI. The reason is that the regulations and operation of NBFC will be as per the RBI Act, 1934. Hence, section 45-IA RBI, 1934 mentions that to be an NBFC member, it should be a member of RBI.
  • According to RBI Act, NBFC member should have a minimum net of Rs.2 crores.
  • To register in RBI, the company should fill in the application form prescribed by the RBI. The company should also submit all the necessary documents.
  • When the company satisfies all the terms and conditions of RBI, including the documents, it will be issued a certificate. This certificate is called as 'Certificate of Registration'.
  • Then, the NBFC can accept public deposits after the possession of this certificate.
  • NBFCs to accept public deposits, they should follow all the terms and conditions prescribed in the Non-Banking Financial Companies Acceptance of Public Deposits Directions, 1998.
The other terms for NBFC registration are as follows:
  • To accept or renew public deposits, NBFCs minimum and maximum periods are 12 and 60 months respectively.
  • Depositors are not offered any gifts or incentives by the NBFCs.
  • If there is any repayment to be done by NBFC, the responsibility will be taken by NBFC alone. RBI is not liable for such repayments.