NBFC

NON-BANKING FINANCIAL INSTITUTION:

A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 2013 engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property.

REQUIREMENT OF REGISTRATION:

In terms of Section 45-IA of the RBI Act, 1934, NO NBFC can commence business of a non-banking financial institution without

a) Obtaining a certificate of registration from the Bank and

b) Having a Net Owned Funds of Rs. 25 lakh (Rs two crore since April 1999).

A company incorporated under the Companies Act, 2013 and desirous of commencing business of non-banking financial institution as defined under Section 45 I(a) of the RBI Act, 1934 should get itself registered under Section 3 of the companies Act, 2013.

EXEMPTION:

 To obviate dual regulation, certain categories of NBFCs which are regulated by other regulators are exempted from the requirement of registration with RBI:

TYPES OF FINANCIAL INSTITUTIONS	AUTHORITY FOR REGULATION, SUPERVISION, SURVEILLANCE AND ENFORCEMENT
Housing Finance Institutions	National Housing Bank
Merchant Banking Company, Venture Capital Fund Companies, Stock Broking, Collective Investment Schemes (CIS)	SEBI
Nidhi Companies, Mutual Benefit Companies	MCA
Chit fund Companies	State government
Insurance Companies	IRDA

PROCEDURE FOR REGISTRATION WITH RBI:

The application can be submitted online by accessing RBI’s secured websitehttps://cosmos.rbi.org.in . At this stage, the applicant company will not need to log on to the COSMOS application and hence user ids are not required.. The company can click on “CLICK” for Company Registration on the login page of the COSMOS Application. A window showing the Excel application form available for download would be displayed. The company can then download suitable application form (i.e. NBFC or SC/RC) from the above website, key in the data and upload the application form. The company may note to indicate the correct name of the Regional Office in the field “C-8” of the “Annex-Identification Particulars” in the Excel application form. The company would then get a Company Application Reference Number for the CoR application filed on-line. Thereafter, the company has to submit the hard copy of the application form indicating the online Company Application Reference Number, along with the supporting documents, to the concerned Regional Office. The company can then check the status of the application from the above mentioned secure address, by keying in the acknowledgement number.

A hard copy of the application form is available at www.rbi.org.in → Site Map → NBFC List → Forms and Returns.

DOCUMENTS REQUIRED TO BE FILLED:

An indicative checklist of the documents required to be submitted along with the application can be accessed from www.rbi.org.in → Site Map → NBFC List → Forms and Returns → Documents required for registration as NBFCs.

By- CA Meenu Agarwal
www.akvassociate.com