In India, any company or entity that engages in the business of financial activities as its principal business and is not a bank, is required to register as a Non-Banking Financial Company (NBFC) with the Reserve Bank of India (RBI) under the provisions of the RBI Act, 1934. Some examples of financial activities include lending and borrowing of money, investment in securities, providing credit facilities, leasing and hire-purchase, and insurance business, among others. It's important to note that entities that are engaged in agricultural operations, industrial activities, sale or purchase of goods, and providing services other than financial services are not considered as NBFCs and do not require registration with the RBI. Do NBFC need RBI license? Yes, Non-Banking Financial Companies NBFC registration in India are required to obtain a license from the Reserve Bank of India (RBI) to operate. The RBI regulates and supervises NBFCs to ensure their financial stability and consumer protection. To obtain an RBI NBFC license from the RBI, the company needs to meet certain eligibility criteria and comply with the regulatory norms and guidelines issued by the RBI from time to time. The criteria may include minimum net owned funds, track record of performance, fit and proper criteria for directors and senior management, and other regulatory requirements. The RBI may also conduct periodic inspections and assessments of NBFCs to ensure their compliance with regulatory norms and guidelines. Failure to comply with these norms may result in penalties, revocation of the license, or other regulatory actions. What is the limit for registration of NBFC? In India, the minimum net owned fund (NOF) requirement for registration as a Non-Banking Financial Company (NBFC) depends on the type of NBFC. For NBFCs engaged in lending activities, the minimum NOF requirement is:
For NBFCs engaged in asset finance activities such as hire-purchase, leasing, and equipment financing, the minimum NOF requirement is Rs. 2 crore. For NBFCs engaged in providing financial services such as investment in securities, the minimum NOF requirement is Rs. 2 crore. It's important to note that these minimum NOF requirements are subject to change based on regulatory guidelines issued by the Reserve Bank of India (RBI) from time to time. Who regulates NBFC in India? The Reserve Bank of India (RBI) is the primary regulatory body that supervises and regulates Non-Banking Financial Companies (NBFCs) in India. The RBI regulates NBFCs under the provisions of the Reserve Bank of India Act, 1934, and the directions issued under it. The RBI's regulatory framework for NBFCs covers a wide range of aspects such as registration, prudential norms, capital adequacy, liquidity management, asset classification, income recognition, provisioning norms, lending norms, and other operational guidelines. Apart from the RBI, NBFCs may also be regulated by other regulatory bodies such as the Securities and Exchange Board of India (SEBI), the Insurance Regulatory and Development Authority (IRDAI), and the Ministry of Corporate Affairs (MCA), depending on the nature of their activities and the sector they operate in. Overall, the regulatory framework for NBFCs in India aims to ensure financial stability, consumer protection, and fair competition in the financial sector. NBFC Registration Online - Process, Fees, Documents, Status The process of registering an NBFC in India involves several steps, including the submission of various documents and payment of fees. Here's an overview of the process, fees, documents, and status of NBFC registration in India: Process:
Fees The fees for NBFC registration with the RBI depends on the type of NBFC and the services it plans to offer. The registration fee for an NBFC engaged in lending and investment activities is Rs. 5,000, and for an NBFC accepting public deposits, the registration fee is Rs. 1,00,000. Additional fees may apply for other services. Documents The following documents are typically required for NBFC registration:
Status: Applicants can track the status of their NBFC registration application online through the RBI's online portal for submission of application and documents. The status of the application is updated at different stages of the process, from receipt of the application to final approval or rejection. Read more This Blog :- How to Get NBFC License in India?
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