NBFC Legal Support in India

Go through the following list of entities that will gain an advantage from acquiring NBFC legal advice:

1. Startups are looking to enter the digital lending market segment.
2. Fintech companies that want to merge, acquire, or register as an NBFC.
3. Existing non-banking financial companies that need assistance with debt settlement, audit, annual filing compliance, and personal loan recovery.

The legal framework for loan recovery is as follows:

1. The Negotiable Instrument Act of 1881: This includes provisions for cheque bounces related to debt repayments.
2. SARFAESI Act of 2002: This legislation provides a framework for non-banking financial companies on asset-based recoveries.
3. Indian Contract Act of 1872: This act governs the roles and responsibilities between the NBFC and its agreements and contracts with borrowers, third-party vendors, and associated partners.
4. Civil Procedure Code of 1908: This law provides sections and rules for the recovery of debt through civil filings.

The list of documents needed for NBFC registration is as follows:

1. KYC, including Aadhar card and PAN of all directors and managers.
2. Memorandum of Association.
3. Articles of Association.
4. Charter of the proposed company.
5. Incorporation certificate authenticated by the Ministry of Corporate Affairs.
6. Goods and Services Tax Number.
7. Business plan and detailed project report.
8. A certified copy of the director's and shareholders’ net worth.
9. A CA-certified statement about the company’s net owned fund (NOF).
10. Last three years' financial statements (audited).

The different types of non-banking financial company legal services are as follows:

1. Legal notice sending.
2. Website policy drafting, including terms & conditions, refund, privacy, child-safety, credit, and recovery policies.
3. Formation of leases, assets, and liquidation agreements.
4. Drafting loan and debt settlement agreements.
5. Complete legal documentation for NBFC registration and RBI-specific license renewals.
6. AML and KYC policy compliance.
7. Annual return filing.
8. Tax reporting.
9. Advice on mergers & acquisitions and business restructuring.
10. Compliance and implementation of the fair practice code & FEMA.

The NBFC legal service providers facilitate the following:

1. Provide an insight into the proposed company that you want to merge or partner with through mergers & acquisitions.
2. Help manage post-restructuring compliance requirements.
3. Acquire approvals from the RBI.
4. Draft mandatory documents to support the said transfer or merger of the NBFC with a fintech or any other company.

Check out the key points mentioned below to fulfil compliance through NBFC legal support:

1. Annual financial reporting.
2. Quarterly and monthly filings.
3. Notification to the RBI about any change in the company’s ownership or organizational structure.
4. Change in internal KYC, AML, loan recovery, and credit policies as per RBI’s latest updates.
5. Employee training on new legal NBFC developments.

You can take the assistance through NBFC legal support:

• Firstly, draft a demand (legal) notice, requesting them to pay off the loan or meet for negotiation or arbitration.
• Arbitrate in accordance with the applicable laws.
• Negotiate or mediate the terms and conditions of debt settlement.
• File a lawsuit in case none of the alternate dispute resolution methods work out.

If a borrower has defaulted on a payment, then you may:

1. Declare the said account as a Non-Performing Asset (NPA) in accordance with the RBI laws within 90 days of such non-payment.
2. Draft and issue the legal notice against the loan defaulter under Section 13(2) of the SARFAESI Act, providing a grace period of 60 days to clear the dues.
3. You can move forward with the possession of secured assets provided by the borrower as a guarantee under Section 13(4) of the SARFAESI Act if the latter fails to address or reply to your demand notice.
4. Sell the assets to recover the due amount through an auction. You must return any additional surplus to the defaulted borrower, if any.

The different types of websites and internal governance policies are as follows:

1. Loan recovery policy
2. Credit policy
3. Anti-Money Laundering policy
4. Privacy policy
5. Terms & Conditions
6. Refund policy
7. Fair Practice Code
8. Risk Management and Grievance Redressal System