Overview of NBFC Business Plan An NBFC business plan is a document containing the executive summary of a company. Every NBFC that wants to attract investments and obtain a loan for working capital initially needs to draft a business plan for NBFC. The draft business plan must act as a road map for achieving both short-term and long-term objectives of the NBFC business structure. Benefits of NBFC Business Plan There are certain benefits of drafting an NBFC business plan in accordance with the RBI framework regulating NBFC registration in India. The following are the benefits of having a business plan for the NBFC business structure: Executive Summary of NBFC Business An NBFC Business Plan provides an executive summary of the entire NBFC business structure and clarifies its strategies, vision, and mission. It allows the NBFC business structure to differentiate the achieved goals from the desired goals. Helps in Setting Priorities An ideal NBFC business plan helps NBFCs set their priorities and timelines for achieving important business-related tasks. An effective NBFC business plan makes the NBFC business more productive and efficient in achieving its goals on time. Assists Tracking Progress An efficient Business Plan for NBFC benefits the business by tracking its progress. It also allows for the comparison and analysis of the goals achieved, thereby increasing the business's productivity and efficiency. Efficient Management of Cash Flow A well-drafted NBFC Business Plan ensures proper financial planning and efficient management of cash inflow and outflow. Lending Flexibility The NBFC business plan enables loan structuring with proper varying repayment schedules, collateral options, and interest rate structures. Objectives of NBFC Business Plan in India The key objectives of a Business Plan for NBFC comprise the reasons why every NBFC should always have a well-drafted NBFC Business Plan. The objectives to be considered while drafting a NBFC business plan in India are prescribed below: Provide information to different stakeholders & funding institutions; Encourages NBFCs to achieve their desired goals; Keep employees updated with the company’s plans & objectives; Provide a roadmap to tackle critical situations. Relevant Factors for Drafting an NBFC Business Plan Some of the important factors significantly impacting the operational sector must be reviewed before drafting an NBFC business plan. The following are the factors required to be reviewed before drafting a business plan for NBFC registration: Technological Advancements An ideal business plan for NBFC should be designed to accommodate new technological solutions such as Blockchain, cloud banking, etc. Digitisation of NBFC Operations An effective business plan for an NBFC should take into account the digitization of banking operations in the coming years. Digitalized banking operations are continuously reducing the number of physical banks in India. Change in Consumer Preferences & Habits An ideal NBFC business plan should always be designed with the changing and ever-evolving habits and preferences of the customers kept in mind. Essential Components for an NBFC Business Plan Essential vital components are required for drafting a business plan for starting an NBFC in India. Consider the following key components to ensure the effectiveness and alignment of organizational objectives: Integration into the Management Cycle The business plan must be integrated into the management cycle. The senior managers of the company must ensure that the NBFC business plan influences the strategic decision-making throughout the organization. Stakeholder Involvement & Alignment The planning process must incorporate, prioritize, and align the interests of the stakeholders while drafting the NBFC business plan. Emphasizing the Business Planning Process The business plan for NBFC must incorporate the entire business planning process along with the management strategies to regulate the NBFC working. Data-Driven Objectivity NBFC's business plan must include data-driven objectives (i.e., statistical data) for regulating the decision-making and substantiating projections in the NBFC. Employee Familiarization & Training The employees must be familiar with the specifications of the draft business plan to contribute and enhance their understanding. Periodic Employee Discussions Periodic employee discussions must be duly conducted to ensure and align the communication gap for promoting collaboration and shared understanding of the business cycle. Implementation Process Next, an unambiguous process must be carried out for implementing the strategic business plan for NBFC. Broad Vision & Future Flexibility The NBFC business plan must incorporate a broad and forward-thinking flexible vision to facilitate future growth prospects. Documents Required for NBFC Business Plan A set of legal documents is required for preparing a comprehensive NBFC business plan. The following are the documents required for preparing a business plan for NBFC: NBFC regulations and reminders; Certificate of participation; Certificate of business commencement; Board resolution authorizing NBFC business plan; KYC Documents; 3 years financial statement; Comprehensive business planning system; MOA and AOA; SWOT Analysis Report; Risk management for unforeseen challenges; Projected balance sheet; Cash flow statement. Process for Designing a Business Plan for NBFC The process of designing an NBFC business plan involves important steps for the proper alignment of business strategies and regulatory requirements. A draft business plan must include the following relevant information as provided below: Services Offered by the NBFC Before drafting an NBFC business plan, the management of the NBFC must have clarity about the services offered to their customers. Further, the business plan covers target market segmentation and the audience in consonance with the market demand for NBFCs. Executive Summary The next step requires developing a clear and concise executive summary. The summary must be designed to provide an overview of the business facts of the NBFC. Draft a Basic Business Plan In this step, the person designing the business plan must do in-depth and extensive research on various kinds of NBFC business structures present in the market. Once the business model has been decided, a proper draft resembling the business model is prepared. Statement of Vision and Mission An ideal NBFC business plan should mention the vision and mission of the NBFC in a summarised form for the proper understanding of the creditors and investors. Description of the Company Next, the management of the NBFC must mention the full description of the company's geographical locations and jurisdictions for carrying out its business. It assists potential creditors and investors in making an informed decision regarding the services and the market analysis on which the NBFC will be focusing. Business Vehicle It is necessary to mention the business vehicle/ legal structure under which the NBFC has been constituted along with the relevant legal formalities. Budgetary Estimate At its initial stage, the NBFC business must have a budgetary estimate for meeting day-to-day requirements. The budgetary estimate must be incorporated into the NBFC business plan to regulate the long-term financial planning of the NBFC. Background of the Promoters The Business Plan should also summarize the academic, professional, and financial background of all the company's promoters. Sales and Marketing The NBFC business plan must briefly mention the sales and marketing techniques and strategies for reaching potential customers and investors. Financial Structure of the NBFC The business plan must mention the financial structure of the NBFC which deals with the spending requirements and expenses that the NBFC may incur during its operations. Organizational Structure Proper information regarding the organizational structure must be included in the NBFC business plan. The information incorporated must include the roles and responsibilities of the shareholders, and directors along with the proper governance mechanism. Financial Technology/ Digitisation Collaborations This part of the business plan is drafted if the NBFC wishes to offer digitized services or products related to financial technology in the present or the future. This step is taken to attract more customers and investors. Validity of an NBFC Business Plan A well-designed NBFC Business Plan made in compliance with the existing regulatory and economic conditions is valid for a specific period only. This means that it does not have an indefinite validity. The validity of an NBFC business plan depends upon the evolving market demand for NBFCs including, business goals, trending market analysis, dynamics of the regulatory sector, evolving economic conditions, etc. Required Fees for NBFC Business Plan The professional fees required for preparing an NBFC business plan range between Rs. 2 to 3 lakhs. Timeline for Creating a Business Plan for NBFC The estimated timeline required for preparing a detailed business plan for NBFC takes around 2 to 4 weeks. Why Choose Enterslice for Preparing NBFC Business Plan? Choose Enterslice to secure your NBFC business plan and end-to-end NBFC annual compliance services. We specialize in providing legal consultancy services, as mentioned below: Advisory Services We can give you overall advice and assistance in designing a well-articulated, regulatory-compliant NBFC Business Plan. Assists with Five Year Projection We also assist NBFCs in preparing a five-year projection plan to elevate diverse funding and investment options. Maintain Effectiveness The professionals at Enterslice ensure maintaining the relevance of the business model by drafting an effective NBFC business plan in India.
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