What is NBFC License Cancellation?
The reserve bank of India is empowered by the RBI Act to the cancel the NBFC granted to a company, who shall not meet the public interest at large. In 2018 more than 3000+ NBFC License has been canceled by the RBI due not meeting the minimum net owned fund of Rs 2 Cr.
What are the circumstances in which NBFC License can be canceled?
- Failed to re-pay the deposits
- Have failed to meet the Minimum net owned fund of Rs 2 Cr by 31-03-2017
- The Operation of NBFC is likely not in the interest of Public at Large
- Have willfully violated the Provisions of the Act.
- Have not filled the require Annual / Quarterly returns to RBI
- failed to Apply for C-Kyc, and Membership of CIC
- Ignorance with prohibitory orders of RBI
- Not Carrying NBFC Activity or working on papers with No Actual borrowers
what are the circumstances in which a Writ petition should be referred to High Court?
- When Net owned fund of Rs 2 Cr has been full filled after 31-03-2017 but before 31-03-2018
- An opportunity of being heard has not been given to the company
- Show cause notice issued by the RBI and reply on time seeking extension has submitted well on time
Where to file Appeal against cancellation of NBFC License?
- An Appeal under sub-section (7) of Section 45-IA of the Reserve Bank of India Act, 1934 may be filled before the Appellate authority “Department of financial services “ (Time limit to file an appeal is 30 days from the receipt of order)
- Write Petition Article under 226 can be filled before the high courts
6 Steps to follow before preparing for Appeal against NBFC License Cancellation
- Double check your ROC Compliance
- Check your RBI Returns (NBS-9)
- Tax Audit Reports
- Quality test of Assets and Liability
- Minimum NOF of Rs 2 Cr
- Adequate reason for
Madras high court Judgement on NBFC License Cancellation – Dated 29-01-2019
In case a company have a valid reason that NBFC License was cancelled by the RBI due to above reasons and have good compliance status of NBFC. Please feel free to write at email@example.com
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