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What are the Vital Documents Required for NBFC Registration?

Vital Documents Required for NBFC Registration
Karan Singh
| Updated: Mar 06, 2021 | Category: NBFC, RBI Advisory

NBFC or Non-Banking Financial Company is the financial organization that offers a range of non-banking and banking services to the customers such as Money Lending, Investment in Securities, Merchant Bankers, Insurance Companies, etc. but not all of these are regulated by the Reserve Bank of India. RBI has exempted companies that come under the authority of a distinct regulator like IRDA, SEBI. In India, Non-Banking Financial Companies are governed and supervised by RBI or the Reserve Bank of India. If anyone wants to establish the Non-Banking Financial Company’s business, it is mandatory to obtain an NBFC Registration Certificate from the Reserve Bank of India. However, for the NBFC Registration, the applicant must arrange and submit all the essential documents required for NBFC Registration. In this blog, we discuss the documents required for NBFC Registration.

NBFC – An Overview

Before we discuss the documents required for NBFC Registration, we have first to discuss the definition of NBFC and types of NBFCs in India. NBFC (Non-Banking Financial Company) provides long-term and specialized credit facilities and attracts foreign grants. The NBFC Registration process is very long, and the applicant who wants to commence Non-Banking Financial Company is required to comply with the rules and regulations of the Reserve Bank of India. All the facilities offered by the Non-Banking Financial Company are flexible, which helps the customers in getting all the latest updates and helps in meeting a particular customer’s needs. To carry out new sections, Non-Banking Financial Companies are providing a variety of products like Housing Finance, leasing, financing. With advanced technology and enhanced experience, Non-Banking Financial Companies are primarily focusing on the customer segment.

Also, Read: A Complete Guide on NBFC Funding In India

Types of NBFCs in India

Based on the liabilities, there are three different types of NBFCs in India:

  • Non-Deposit taking NBFCs.
  • Deposit-taking NBFCs.
  • NBFC-ND-Systematically Important.

Based on Activities, there are ten different types of NBFCs in India:

  • NBFC-Investment and Credit Company.
  • NBFC-Infrastructure Finance Company.
  • NBFC-Mortgage Guarantee Company.
  • NBFC-Non-Operative Financial Holding Company (NOFHC).
  • NBFC-Micro Finance Institution.
  • NBFC-Systemically Important Core Investment Company.
  • NBFC-Infrastructure Debt Fund.
  • NBFC-Factor.
  • NBFC Account Aggregator.
  • NBFC-Peer to Peer Lending Platform.

Vital Documents Required for NBFC Registration in India

Following are some essential documents required for NBFC Registration in India:

  • Incorporation Certificate of the company.
  • Submit Memorandum of Association (MOA) and Article of Association (AOA) of the company.
  • Provide director’s details and subscriber’s details of the company.
  • PAN of the company.
  • Submit Board Resolution mentioning that:
  1. The company is not operating any NBFC activities and will not begin the operation as similar to Non-Banking Financial Companies before obtaining registration from the Reserve Bank of India.
  2. As of the date, the company doesn’t have any customer boundary and will not have any interface in the future without any approval of RBI.
  3. As per the guidelines of RBI, the company formulates fair practices code.
  4. The UIB in the group where the director holds substantial interest; otherwise, they have not accepted any public deposit in the past and is not holding the same at present and will not accept it in the future.
  5. The company in the past has not accepted any public funds, does not hold the same at present, and will not hold any public funds in the future.
  • Documents required from the Directors:
  1. Highest qualification of the director.
  2. Address proof of the director.
  3. Identity proof of the director.
  4. Submit experience certificate.
  5. Net worth certificate.
  6. Details of directorship in any other companies (if the director have any).
  7. Business profiles.
  8. CIBIL report.
  9. Banker’s report.
  • Documents required from the Shareholders:
  1. Identity proof of the subscriber
  2. Address proof of the subscriber.
  3. CIBIL Report.
  4. Net worth certificate.
  5. Banker’s Report.
  • Additional documents related to the applicant company and its working is also required:
  1. IT Policy.
  2. Business and Loan Structure.
  3. Income Tax Returns.
  4. Disclosure in the Annexure I, II, and III.
  5. Shareholding Details.
  6. Details of Banker and Auditor.

Note: All the documents for NBFC Registration are required in physical form and online, and the department may also ask for additional documents apart from the documents as mentioned above. And all the documents mentioned above shall be self-attested by subscribers and directors.

What are the steps required in the NBFC Registration?

Before obtaining a registration certificate, you need to arrange all the above-mentioned documents required for NBFC Registration and then follow the below-mentioned steps that are required before the registration:

  1. Company Registration under the Companies Act, 2013.
  2. Net Owned Fund (NOF) should be Rs. 2 crores.
  3. To register as Non-Banking Financial Company, a good CIBIL score of the director and subscriber is required.
  4. One company’s director shall be an independent director dealing in a professional capacity.
  5. COSMOS filing, i.e. submitting the documents online on the website of RBI.
  6. CARN will be generated once the application form is filed by the applicant online, along with the necessary documents.
  7. Submit a physical copy of all the vital documents to the regional branch of the Reserve Bank of India.
  8. Once you submit all the documents, the application is verified and examined by the Reserve Bank of India, and in case if there is no further query and verification, the department will issue a Certificate of Registration (COR) to the applicant company.

Operating a Non-Banking Financial Company is equally important as NBFC Registration; for that, you need to fulfil the annual compliances of NBFC. To avoid false activities and for preventing speculation, the compliance of RBI is getting harder day by day. Proper compliance and documentation are required to fulfil by the Non-Banking Financial Company to avoid penalties.

After the NBFC Registration, it is required to fulfil with the Post Registration Compliances:

  1. Income Tax Return.
  2. ROC Return.
  3. KYC Registration.
  4. NBS Returns.
  5. FIU Registration.
  6. Statutory Audit.
  7. Membership from the Credit Rating Agencies.

Conclusion

NBFC Registration requires coordination which makes sure the better management and conformity of norms. The applicant requires to submit all the essential documents required for NBFC Registration. Proper compliance and documentation result in transparency and confidence in the people’s mind. To build a strong connection, the primary objective of Non-Banking Financial Company (NBFC) is to focus on the customer’s need and fulfil all the essential compliances. For more details regarding NBFC Registration, contact Swarit Advisors; our experts will help you in NBFC Registration and Post compliances after registration.

Also, Read: Revised Regulatory Framework Proposed by RBI for NBFCs

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Karan Singh

A legal writing enthusiast, a wanderer, and a zealous reader. After gaining a lot of knowledge about the diverse legal topics and developing research skills, Karan joined the league of legal content writers to deliver quality-rich blogs.

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