{"id":1134,"date":"2017-05-26T08:35:07","date_gmt":"2017-05-26T08:35:07","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=1134"},"modified":"2020-10-13T11:37:11","modified_gmt":"2020-10-13T06:07:11","slug":"procedure-incorporation-nbfc-companies-act-2013","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/procedure-incorporation-nbfc-companies-act-2013\/","title":{"rendered":"Procedure for Incorporation of NBFC Under Companies Act 2013: Complete Details"},"content":{"rendered":"<p class=\"has-drop-cap\"><a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;NBFC&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;Non-Banking Financial Companies (NBFC) operate similarly to banks but do not possess the legal status of a bank. Registered under the Companies Act 2013 and governed by the RBI Act&amp;#039;s section(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/nbfc\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>NBFC<\/a> is an acronym used for Non-Banking Financial Company incorporated under the Companies Act, 2013 and managed by RBI. The functions of an NBFC are mostly similar to that of Banks. They are involved in the businesses of Loans and Advances, Acquisition of stocks, shares, hire purchase insurance business, or chit-fund business. NBFCs are well known to provide quick loans to individuals and the corporate in contrast to the traditional banks.&nbsp; NBFCs are filling up the gap left by the banks in the financial <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Market&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;A market is a structured environment, either physical or virtual, where buyers and sellers convene to trade goods and services. This trading hub operates based on the principles of supply and(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/market\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>market<\/a> as Banks alone cannot serve the requirement of all. Moreover, the process of <a href=\"https:\/\/enterslice.com\/nbfc-registration\"><strong>NBFC Registration<\/strong><\/a> is a lot easier as compared to the Banks. In this blog, we shall discuss in detail the process of incorporation of NBFC in India.<\/p>\n\n\n\n<div class=\"embed-responsive embed-responsive-16by9\">\n  <iframe loading=\"lazy\" width=\"560\" height=\"315\" src=\"https:\/\/www.youtube.com\/embed\/v_k14FAoGl8\" allowfullscreen=\"\"><\/iframe>\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\">Points of difference between Banks and NBFCs<\/h2>\n\n\n\n<ul><li>A Bank is registered under the Banking Regulation Act, 1949, whereas an NBFC is registered under the Companies Act 2013 or 1956 and RBI Act, 1934.<\/li><li>Unlike Banks, NBFCs cannot accept and lend deposits.<\/li><li>Foreign Investment in Banks is limited up to a specific fixed limit, whereas <strong><a href=\"https:\/\/enterslice.com\/learning\/foreign-investments-criteria-for-nbfcs\/\">foreign investment in NBFC<\/a> <\/strong>is allowed 100%.<\/li><li>Banks can issue a self-demand draft on itself, whereas NBFCs are not allowed to issue a self-demand draft.<\/li><li>An NBFC cannot issue cheque drawn on itself as they are not part of the payment system.<\/li><li>Bank provides a variety of transaction services, whereas NBFCs do not facilitate transaction services.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Pre-Requisites for Incorporation of NBFC<\/h2>\n\n\n\n<p>For incorporation of NBFC in India following conditions must be fulfilled:<\/p>\n\n\n\n<ul><li>The Company must be registered under the Companies Act 1956 or Companies Act 2013.<\/li><li>The Company is required to have a Net-Owned Capital Fund of 2 crore, which includes Share Capital, Premium on Shares, and Reserves, if any.<\/li><li>At least one of the Directors of the Company must have a working experience with NBFC\/Banking.<\/li><li>The CIBIL records of the Company must be clear without exception.<\/li><li>The applicant company is required to draft a detailed <a href=\"https:\/\/enterslice.com\/business-plan\"><strong>business plan<\/strong><\/a> for the next five years.<\/li><li>The middle name of the Company must have either of the keywords out of Finance, Leasing, Capital Fintech, etc.<\/li><li>In case of an FDI, the necessary <strong>FDI Compliances<\/strong> as per the FEMA Act must be complied with.<\/li><li>Before incorporating an NBFC, it is important for the Company to have an experienced NBFC consultant.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Benefits of NBFC<\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter size-large\"><img decoding=\"async\" loading=\"lazy\" width=\"1000\" height=\"600\" src=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/07\/Benefits-of-NBFC.png\" alt=\"Benefits of NBFC\" class=\"wp-image-35705\" srcset=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/07\/Benefits-of-NBFC.png 1000w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/07\/Benefits-of-NBFC-300x180.png 300w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2020\/07\/Benefits-of-NBFC-768x461.png 768w\" sizes=\"(max-width: 1000px) 100vw, 1000px\"\/><\/figure><\/div>\n\n\n\n<ul><li>NBFCs offer loans and credit facilities at a faster rate as compared to the traditional Banks.<\/li><li>NBFCs provide loans at lesser interest rates, thus making it easy and affordable for the borrowers to avail of a loan.<\/li><li>Availing money from NBFCs is a lot easier as compared to the Banks.<\/li><li>Extensive use of technology makes NBFCs a more favored choice as compared to traditional Banks. The use of technology enhances the whole process of availing services from NBFCs a lot easier and hassle-free.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Documents required for Incorporation of NBFC<\/h2>\n\n\n\n<p>Given below is the detailed list of documents required for incorporation of NBFC:<\/p>\n\n\n\n<ul><li>The Certificate of incorporation of the Company<\/li><li>Memorandum of Association (MoA) accompanied by Articles of Association (AOA)<\/li><li>Educational qualification documents of the proposed Directors<\/li><li>Experience certificate of the Director proving his prior experience in the field of NBFC\/Banking<\/li><li>CIBIL Data of the Director<\/li><li>Documents verifying the location of the Company<\/li><li>Board Resolution approving the submission of the application<\/li><li>Board Resolution showing the Company&rsquo;s acceptance\/pledge concerning the integrity of public deposit.<\/li><li>Board Resolution showing the formulation of &ldquo;Fair Practices Code.&rdquo;<\/li><li>Audited Balance Sheet of the last three years<\/li><li>Income Tax returns<\/li><li>Bank account with a minimum equity share of Rs 2 crore<\/li><li>PAN Card of the Company<\/li><li>Detailed action plan for the next five years<\/li><li>Complete plan of the organization hierarchy and decision-making process<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">The registration process for Non-Banking Financial Company (NBFC)<\/h2>\n\n\n\n<ul><li>The first step towards the incorporation of NBFC is to register the Company under the Companies Act 2013.<\/li><li>The minimum Net owned capital fund of the Company should be Rs 2 crore.<\/li><li>The CIBIL record of the Company should be clean without any exception.<\/li><li>The Company must also comply with the requirements for capital compliances and FEMA.<\/li><li>After all the above-mentioned conditions are fulfilled, visit the official website of the Reserve Bank of India (RBI) and fill the details in the application form.<\/li><li>Next, you will have to submit all the required documents.<\/li><li>After filling up the application and submission of documents, a Company Application Reference Number (CARN) is generated.<\/li><li>The hard copy of the required documents as mentioned in the website needs to be submitted in the Regional Office of the RBI.<\/li><li>Further, the regional office sends the application to the central office of the Reserve Bank of India (RBI), which then scrutinizes the application and does a background check of the documents.<\/li><li>If all the requirements mentioned in section 45-1A of the Reserve Bank of India Act are satisfied, the License is granted to the Company.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">NBFC Incorporation Fees<\/h2>\n\n\n\n<p>Given below is the classification of the fees structure of NBFC registration:<\/p>\n\n\n\n<ul><li>Firstly while incorporating an NBFC, the applicant is required to pay the fees to the Ministry of Corporate Affairs (MCA) based on the Company&rsquo;s <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Authorized Capital&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;Authorized capital, often referred to as &amp;quot;authorized shares&amp;quot; or &amp;quot;authorized stock,&amp;quot; is a fundamental concept in the world of finance and business. It plays a pivotal role in determining a(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/authorized-capital\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>authorized capital<\/a>.<\/li><li>The fee structure of NBFC also includes the expenses for the <a href=\"https:\/\/enterslice.com\/learning\/an-analysis-on-memorandum-of-association-under-the-companies-act\/\"><strong>Memorandum of Association<\/strong><\/a> (MoA) and Articles of Association (AoA).<\/li><li>To<strong> <a href=\"https:\/\/enterslice.com\/learning\/nbfc-registration-process\/\">register as NBFC<\/a>,<\/strong> a Company is also required to pay a certain amount of fees to fill Simplified Proforma for Incorporating a Company Electronically (SPICe +) form.<\/li><li>The generation of <a href=\"https:\/\/enterslice.com\/learning\/importance-of-digital-signature\/\">Digital Signature Certificate<\/a> (DSC) for the Directors of the Company also requires the payment of periodic fees.<\/li><li>An additional fee has to be paid while submitting the application to the registrar.<\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\">Final Thoughts<\/h2>\n\n\n\n<p>NBFCs are playing a vital role in the financial sector by filling up the void left in the sector by the traditional banking system. These Non-Banking Financial Companies are entirely changing the experience of Banking by using modern-day technologies. The extensive use of technology has made the overall experience of NBFCs quite hassle-free for its customers. The various benefits offered by NBFCs such as flexible tenure and interest rates, use of<strong> <a href=\"https:\/\/enterslice.com\/learning\/how-emerging-technologies-helping-nbfc\/\">financial technology<\/a><\/strong>, etc. are allowing them to build a strong customer base. Also, for corporate seeking NBFC registration, the overall incorporation of NBFC gets very simple with proper guidance. If you wish to incorporate an NBFC, our team of experts at <a href=\"https:\/\/enterslice.com\/\"><strong>Enterslice<\/strong><\/a> will guide you to the overall process of NBFC incorporation. Further, if you have any queries related to NBFC incorporation or any other NBFC related topic, please contact us.<\/p>\n\n\n\n<blockquote class=\"wp-block-quote\"><p><strong><em>Also read: <a href=\"https:\/\/enterslice.com\/learning\/regulatory-requirements-nbfc-india\/\">What are the Regulatory Requirements of Non-Banking Financial Company in India?<\/a><\/em><\/strong><\/p><\/blockquote>\n","protected":false},"excerpt":{"rendered":"<p>NBFC is an acronym used for Non-Banking Financial Company incorporated under the Companies Act, 2013 and managed by RBI. The functions of an NBFC are mostly similar to that of Banks. They are involved in the businesses of Loans and Advances, Acquisition of stocks, shares, hire purchase insurance business, or chit-fund business. NBFCs are well [&hellip;]<\/p>\n","protected":false},"author":26,"featured_media":35704,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[6],"tags":[720],"acf":{"service_id":"8"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>Procedure for Incorporation of NBFC Under Companies Act 2013<\/title>\n<meta name=\"description\" content=\"NBFC Registration - Incorporation of NBFC (Non-Banking Financial Companies) under Companies Act has have been simplified, in a recent time period.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/procedure-incorporation-nbfc-companies-act-2013\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Procedure for Incorporation of NBFC Under Companies Act 2013\" \/>\n<meta property=\"og:description\" content=\"NBFC Registration - Incorporation of NBFC (Non-Banking Financial Companies) under Companies Act has have been simplified, in a recent time period.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/procedure-incorporation-nbfc-companies-act-2013\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2017-05-26T08:35:07+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-10-13T06:07:11+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2017\/05\/Procedure-for-Incorporation-of-NBFC.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"670\" \/>\n\t<meta property=\"og:image:height\" content=\"352\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Shubham Chauhan","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/10\/IMG_20191011_160437__01.jpg","authorDescription":"A passionate legal content writer, a nature enthusiast, an avid reader, and a part-time thinker. By means of conducting in-depth research on industry related topics, Shubham often builds flawless and intelligible legal content for populace from all walks of life.","postViews":991,"readingTime":4,"nextPost":{"id":1139,"slug":"semi-closed-wallets"},"prevPost":{"id":1124,"slug":"semi-closed-wallet-license"},"featuredMediaUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2017\/05\/Procedure-for-Incorporation-of-NBFC.jpg","postTerms":"NBFC","_links":{"self":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/1134"}],"collection":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/users\/26"}],"replies":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/comments?post=1134"}],"version-history":[{"count":0,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/1134\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media\/35704"}],"wp:attachment":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media?parent=1134"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/categories?post=1134"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/tags?post=1134"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}