{"id":5984,"date":"2021-06-10T06:17:04","date_gmt":"2021-06-10T06:17:04","guid":{"rendered":"https:\/\/swaritadvisors.com\/blog\/?p=5984"},"modified":"2021-06-10T06:36:20","modified_gmt":"2021-06-10T06:36:20","slug":"nbfc-registration-cancellation","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/blog\/nbfc-registration-cancellation\/","title":{"rendered":"All You Need To Know About NBFC Registration Cancellation"},"content":{"rendered":"\n<p class=\"has-drop-cap\">In\nIndia, the number of Non-Banking Financial Companies is decreasing radically,\nmainly due to the amended criteria for the net owned funds. The rate of\ncancellation has been escalated appreciably in the last few years, making it\nharder for the present companies to operate their business. There is a\nprovision for surrendering the NBFC License. In this write-up, you will learn\nabout the NBFC Registration Cancellation.<\/p>\n\n\n\n<p>The Reserve Bank of India is on high alert ever since it has choked out a bunch of Non-Banking Financial Companies plan India for dishonest business practice. Besides tightening the compliances, the Reserve Bank of India is also concentrating on setting up revised criteria through amendments to avoid unlawful practices.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a5f1f4b301\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a5f1f4b301\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/blog\/nbfc-registration-cancellation\/#Net_Owned_Fund_%E2%80%93_Meaning\" title=\"Net\nOwned Fund \u2013 Meaning\">Net\nOwned Fund \u2013 Meaning<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/blog\/nbfc-registration-cancellation\/#Major_Reasons_for_the_NBFC_Registration_Cancellation\" title=\"Major\nReasons for the NBFC Registration Cancellation\">Major\nReasons for the NBFC Registration Cancellation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/blog\/nbfc-registration-cancellation\/#RBIs_Takes_on_NBFC_Registration_Cancellation\" title=\"RBI\u2019s\nTakes on NBFC Registration Cancellation\">RBI\u2019s\nTakes on NBFC Registration Cancellation<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/blog\/nbfc-registration-cancellation\/#Conclusion\" title=\"Conclusion\">Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Net_Owned_Fund_%E2%80%93_Meaning\"><\/span>Net\nOwned Fund \u2013 Meaning<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>An\nentity can appeal to the proposed judiciary against the cancellation order\npassed by the Reserve Bank of India. The concerned company can exercise such\nauthority under <strong><em>Clause 7(I) of Section 45-IA of the RBI Act, 1934. <\/em><\/strong>The word\n\u201cNet Owned Fund\u201d under this clause is defined in the following way:<\/p>\n\n\n\n<p><strong><em>Total\nPaid-up Equity Capital + Free Reserves \u2013 (Accumulated Balance of Loss + Other\nIntangible Assets + Deferred Revenue Expenditure)<\/em><\/strong><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Major_Reasons_for_the_NBFC_Registration_Cancellation\"><\/span>Major\nReasons for the NBFC Registration Cancellation<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>Following\nare some significant reasons for the NBFC Registration Cancellation:<\/em><\/strong><\/p>\n\n\n\n<ul><li>In the case of Non-Banking Financial Company works to maintain conventionality with norms of <a href=\"https:\/\/swaritadvisors.com\/nbfc-registration\" class=\"text-primary\"><strong>NBFC Registration<\/strong><\/a> described under the Act or additions circumstances of the Reserve Bank of India when the Registration Certificate was granted.&nbsp; For instance, if the company or entity cannot fulfil the requirement of obtaining paid-up capital, it could be the outcome in NBFC Registration Cancellation.<\/li><li>In the case of the misconduct of the account box or other records.<\/li><li>In case if the Non-Banking Financial Company fails to surrender the account book or other essential record at the time of examination conducted by the auditing team of the Reserve Bank of India.<\/li><li>If the Non-Banking Financial Company accepts the deposit that has been tagged illegal by the Reserve Bank of India.<\/li><li>The Reserve Bank of India is less likely to take instant action on defaulter upon receiving the grievance. It is because they are bound to provide equal opportunity to either of the parties to signify their standpoint over the disputes. While processing the grievance, the Reserve Bank of India takes different aspects into account, as the financial status of the Non-Banking Financial Company, before reaching any decision.<\/li><li>Every Non-Banking Financial Company in India is legally responsible for performing its business activities in the public interest. Under no scenarios, Non-Banking Financial Company can diverge from the present RBI policies, whether it&#8217;s a query of implementing an alteration of the following an urgent order.<\/li><li>In case the Non-Banking Financial Company struggles to keep up with the compliances concerning the company\u2019s capital.<\/li><li>If the Non-Banking Financial Company ignores to meet the directions issued by the RBI. Upon the release of guidelines, the personals of the Reserve Bank of India can make a surprise visit to the business premises to find out whether the order has been followed or not.<\/li><li>In case if the Non-Banking Financial Company changes the interest rate for the loan, avail of personal advantages. This is a strict crime as it could damage the business future and its operation forever.<\/li><li>In the case of the Non-Banking Financial Company tagged as a defaulter by a depositor on account of deposit repayment. In such cases, the depositors can approach the Company Law Board or client to file a complaint against the defaulter to recover their deposit.<\/li><li>In case the Non-Banking Financial Company ends and ceases to continue its business operations in India. The Non-Banking Financial Companies are only allowed to conduct their financial activities as per the business principle. This means a company&#8217;s financial asset gets formed more than 50% of its total assets, where cash inflow from the financial assets is greater than 50% of its total income. The company that fulfils this situation can operate its business operation as a Non-Banking Financial Company.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"RBIs_Takes_on_NBFC_Registration_Cancellation\"><\/span>RBI\u2019s\nTakes on NBFC Registration Cancellation<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong><em>Following\nare some RBI\u2019s takes on NBFC Registration Cancellation:<\/em><\/strong><\/p>\n\n\n\n<ul><li>Suppose any of the business companies found in the state of misconduct obtaining financial services that defy the provisions of the RBI. In that case, RBI can issue a revocation order for a license.<\/li><li>Before ceasing the activities of a business, the Reserve Bank of India communicates the matter with the defaulters through a notification showing the grounds on which revocation occurred. Being a legitimate legal body, the RBI ensures the judicial framework\u2019s manifestation via the correct interpretation of the dispute. To stick to transparency, the <strong>Reserve Bank of India<\/strong><sup><a href=\"https:\/\/www.rbi.org.in\/\" class=\"text-primary\"><strong>[1]<\/strong><\/a><\/sup> often associates the defaulters through a show-cause notice concerning the issuance of a revocation notice &amp; seeks their feedbacks.<\/li><li>It permits the concerned companies to put their matters in front of the judicial system. As soon as the Reserve Bank of India interprets the case and concludes that revocation favours the public interest, it will issue a revocation order.<\/li><li>It must be remembered that there is a penalty provision as per Section of Section 58 B (6) of the RBI Act for the violation of the policies of the Reserve Bank of India. Therefore, under no condition, the Reserve Bank of India can bypass any of its law concerning license revocation.<\/li><\/ul>\n\n\n\n<p><strong><em>Key\nTakeaway<\/em><\/strong><\/p>\n\n\n\n<ol><li>Non-Banking Financial Company\ncan choose judicial assistance under the <strong><em>sub-section (7) of the Reserve Bank of India\nAct, 1934<\/em><\/strong>;<\/li><li>Non-Banking Financial Company\ncan file the appeal with the Central Government of India;<\/li><li>The appeal ought to be filed within\none month from the NBFC Registration date was notified by the Reserve Bank of\nIndia license revocation;<\/li><li>The decision making concerning\nsuch a matter is in the Central Government\u2019s hand.<\/li><\/ol>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Non-Banking\nFinancial Companies have a significant impact on the financial establishment in\nthe Indian economy. It has collected the scope of easy credit accessible to the\ndisadvantaged section of society. It has also separated the processing of a\ntypical loan disbursement of those formerly available to wealthy companies. All\nin all, a Non-Banking Financial Company is vital for the development of the\nnation. <\/p>\n\n\n\n<p>But, that does not mean that such financial houses take the liberty of bypassing the law. Therefore, keeping contravention of the law, the Reserve Bank of India is now taking practical measures to discourage dishonest business practices.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/blog\/buying-and-selling-of-nbfcs-in-india\/\">Buying and Selling of NBFCs in India \u2013 An Overview\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>In India, the number of Non-Banking Financial Companies is decreasing radically, mainly due to the amended criteria for the net owned funds. The rate of cancellation has been escalated appreciably in the last few years, making it harder for the present companies to operate their business. There is a provision for surrendering the NBFC License. [&hellip;]<\/p>\n","protected":false},"author":6,"featured_media":5988,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[58],"tags":[691],"acf":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/5984"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/users\/6"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/comments?post=5984"}],"version-history":[{"count":14,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/5984\/revisions"}],"predecessor-version":[{"id":6000,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/posts\/5984\/revisions\/6000"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media\/5988"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/media?parent=5984"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/categories?post=5984"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/blog\/wp-json\/wp\/v2\/tags?post=5984"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}