Documents Required for NBFC Registration in India

Ashish M. Shaji

12 Oct, 2020

In this article we shall discuss the documents required for NBFC registration, but before that let’s understand the significance of NBFCs.

Significance of NBFCs

Non-Banking Financial Companies (NBFCs) are emerging as a promising sector engaged in providing loans and advances to primarily retail customers and remote areas which are outside the purview of other banks. The growing needs of finance are further enlarging the scope of NBFC license in India.

 Customers qualified to obtain finance, but are unable to do so because of the lack of good credit score, specifically benefit from the NBFC’s mechanism.

This introduces healthy competition between the two major finance players, ultimately supporting the government’s agenda of full financial inclusion.

The Reserve Bank of India (RBI) consistently stresses the importance of micro, small, and medium enterprises (MSMEs) in fueling economic growth. Despite contributing significantly to India’s growth, a large majority of MSMEs are excluded from the formal financial sector. In such a scenario, NBFCs are focusing their efforts on targeting this lucrative yet underserved segment.

Pre-requisites for NBFC Registration with RBI

There are few major requisites for an NBFC to be registered with RBI:

• It should be a company registered under Section 3 of Companies Act, 1956.
• It should have minimum net owned funds of 200 lakh.
• There should be at least 1 director in the company from the same background.
• There must be a good CIBIL score to register as a NBFC.

When the above conditions are satisfied, an online application shall be filed with RBI by getting access to RBI’s secured website. After filing the application online, a hard copy of the form along with necessary documents shall be submitted to the regional RBI. Then, the status of the application from the above mentioned secure address can be checked by filling in the acknowledgement number.

Documents required for NBFC Registration

Before you get ready to file your application online or offline, be prepared with the following list of required documents necessary to be filed along with the application for registration:

• Certified true copies of the Certificate of Incorporation and Certificate of Commencement of Business in case of public limited companies
• Certified copies of an extract only of the main object clause in the MOA relating to the financial business.
• A board resolution stating that the company shall adhere to the “Fair Practices Code” as per RBI^[1] Guidelines and shall not carry on the following activities before getting registration from RBI:
  1. Carrying on any NBFC activity;
  2. Accepting any public deposit;
• For existing companies, the Audited Balance Sheet and Profit & Loss account along with directors and auditor’s report for the entire period the company is in existence, or for the last three years, whichever is less;
• Copy of the certificate of the highest educational and professional qualification in respect of all the directors
• Copy of experience certificate, if any, in the Financial Services Sector (including Banking Sector) in respect of all the directors;
• Bankers report providing details of deposits and loans balances as on the date of application and the conduct of the account.

Conclusion

After the submission of an application for NBFC registration India, RBI will scrutinize the documents on all grounds and on being satisfied with the proper compliance with the rules and regulations, it shall issue a certificate of commencement of business.

Do you wish to apply to register NBFC in India? Or are you looking for an NBFC takeover advisory? Would you wish to know about the NBFC / Fintech Consulting or know more about peer to peer lending? Please feel free to contact Enterslice, India’s leading online legal and tax advisory firm.

Read our article:Applicability and Effects of GST on NBFCs in India