NBFC Compliance
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NBFC Compliance
we specialize in providing comprehensive solutions for Non-Banking Financial Companies (NBFCs). Our aim is to assist businesses in navigating the complex regulatory landscape of NBFC compliance, ensuring that they meet all legal and operational requirements to function efficiently and effectively.
Legal Framework and Requirements
Registration under the Companies Act, 2013
1. Eligibility:
To be eligible for registration as an NBFC, a company must fulfill the following criteria:
- Incorporation: The company must be registered under the Companies Act, 2013 or any previous act.
- Minimum Net Owned Funds (NOF): The company should have a minimum NOF of ₹2 crores.
- Principal Business: The company’s financial assets should constitute more than 50% of its total assets, and income from financial assets should constitute more than 50% of the gross income.
- Fit and Proper Criteria: The directors of the company must meet the ‘fit and proper’ criteria prescribed by the Reserve Bank of India (RBI).
To be eligible for registration as an NBFC, a company must fulfill the following criteria:
- Incorporation: The company must be registered under the Companies Act, 2013 or any previous act.
- Minimum Net Owned Funds (NOF): The company should have a minimum NOF of ₹2 crores.
- Principal Business: The company’s financial assets should constitute more than 50% of its total assets, and income from financial assets should constitute more than 50% of the gross income.
- Fit and Proper Criteria: The directors of the company must meet the ‘fit and proper’ criteria prescribed by the Reserve Bank of India (RBI).
To be eligible for registration as an NBFC, a company must fulfill the following criteria:
- Incorporation: The company must be registered under the Companies Act, 2013 or any previous act.
- Minimum Net Owned Funds (NOF): The company should have a minimum NOF of ₹2 crores.
- Principal Business: The company’s financial assets should constitute more than 50% of its total assets, and income from financial assets should constitute more than 50% of the gross income.
- Fit and Proper Criteria: The directors of the company must meet the ‘fit and proper’ criteria prescribed by the Reserve Bank of India (RBI).
2. Essential Documents:
To be eligible for registration as an NBFC, a company must fulfill the following criteria:
- Incorporation: The company must be registered under the Companies Act, 2013 or any previous act.
- Minimum Net Owned Funds (NOF): The company should have a minimum NOF of ₹2 crores.
- Principal Business: The company’s financial assets should constitute more than 50% of its total assets, and income from financial assets should constitute more than 50% of the gross income.
- Fit and Proper Criteria: The directors of the company must meet the ‘fit and proper’ criteria prescribed by the Reserve Bank of India (RBI).
Documents NBFC Compliance Registration
- Application Form: Submit an application form with all required details and documents to the RBI.
- Fees: Pay the requisite registration fees as prescribed by the RBI.
- Verification: The RBI will verify the application and documents submitted.
- Inspection: An on-site inspection may be conducted by the RBI to ensure compliance with the regulatory framework
- Approval: Upon successful verification and inspection, the RBI will grant a Certificate of Registration (CoR).
Advantages of NBFC Compliance
- Strategic Location: Moving to a location that is more strategic for business operations can enhance efficiency and reduce costs.
- Expansion Opportunities: A new location may offer better expansion opportunities and access to new markets.
- Better Facilities: Modern facilities and infrastructure at the new location can improve operational capabilities.
- It has been able to raise capital through public buyers
- Regulatory Benefits: Depending on the location, there may be regulatory or tax advantages.
- Brand Image: A prestigious location can enhance the company’s brand image and credibility.
How can Bizlaw India help you ?
At Bizlaw India, we provide end-to-end NBFC compliance solutions, including:
- Consultation: Expert consultation on eligibility, documentation, and regulatory requirements.
- Documentation: Assistance in preparing and verifying all necessary documents.
- Application Filing: Guidance and support in filing the NBFC registration application with the RBI.
- Compliance Management: Ongoing compliance management to ensure adherence to regulatory norms.
Frequently Asked Questions
Non-Banking Financial Companies (NBFCs) are financial institutions that provide various banking services but do not hold a banking license. They engage in activities such as loans and advances, acquisition of shares, and other marketable securities of similar nature, insurance business, chit business, etc.
To register as an NBFC, a company must have a minimum Net Owned Funds (NOF) of ₹2 crores.
Yes, foreign companies and NRIs can invest in NBFCs, subject to the Foreign Direct Investment (FDI) guidelines issued by the Government of India and the Reserve Bank of India (RBI).
- Licensing: Banks require a banking license from the RBI, whereas NBFCs do not.
- Deposits: NBFCs cannot accept demand deposits (current and savings accounts).
- Payment Systems: NBFCs are not part of the payment and settlement system and cannot issue cheques drawn on themselves.
- CRR/SLR: NBFCs are not required to maintain Cash Reserve Ratio (CRR) or Statutory Liquidity Ratio (SLR).
The registration process for an NBFC typically takes between 3 to 6 months, depending on the completeness of the application and the due diligence process by the RBI.
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