How can I get NBFC banking license?

What is an NBFC?

A Non-Banking Financial Company (NBFC) is a registered company which is engaged in the business of lending and investing. 

Lending through multiple modes such as Personal Loans, Home Loan, Gold Loan, Loans against securities,  SME Loans, Educational Loans, Infrastructure Finance etc.

Investing means buying of shares, debentures of other securities. 

How can I get NBFC banking license?

Process in brief:

1. For becoming an NBFC, an application has to be made to the RBI for grant of certificate of registration.

2. This application has to be made by a Company. So first incorporate a Company with the objects of finance and related business you wish to venture into.

3. There is a requirement of net owned fund of Rs. 10 Crore. Make sure of this requirement well in advance.

4. At least one of the directors should have Banking, NBFC or related experience.

5. An application is filed online at xbrl portal of RBI. Earlier it used to be at cosmos portal.

6. There a checklist of documents is also hosted which are required by the RBI for processing an application. Some of them includes MOA, Board resolutions, last 3 years financials, (if already in existence for more than 3 years), CIBIL reports of directors along with other relevant personal KYC and other details of the Directors and promoters, their background checks with full bio data, etc.

7. The application is filed both online and offline mode to the RBI office having jurisdiction as per registered office. Offline application is submitted when online application’s submission is successfully done and we get ARN for our application. It can also be used for track the status.

8. All applications are required to be go under a thorough scrutiny. It takes time as well.

9. It will be also dependent if we applying for type 1 NBFC or type 2.

What is the requirement for NBFC license?

As per a recent report by the RBI, the share of NBFCs in the total credit extended to the economy increased from 16.4 per cent in December 2022 to 29.1 per cent in February 2023. With a promising future ahead, they are projected to expand at a CAGR of 18.5 per cent between 2021 and 2026, as per Research and Markets.

Therefore, If you wish to enter this promising and exciting business opportunity, you should have NBFC license from the Reserve Bank of India.

 

How can I get NBFC certificate online?

On your behalf, we shall be making an application with a complete set of documents. This application would also be submitted to the RBI office in physical. One can expect 7-8 months for receiving the NBFC Certificate.

How do I start a finance company?

Obtain NBFC license, set up necessary infrastructure and start lending. 

How do I buy an NBFC?

You have an option of buying the already registered License-holder NBFC from its promoters, if you wish to start early.

How do NBFC earn money?

NBFCs grant loans to the Borrowers, the difference between the cost of funds for the NBFCs and Amount charged from the Borrowers is the earnings for the NBFC.

How much does NBFC license cost?

It depends on category of the NBFC, for type it is approx INR 7.5 Lakh.

What is the limit of NBFC registration?

There is no limit of NBFC registration.

Is NBFC license transferable?

Yes, it is. The license is very well transferable, 

For transferring the NBFC license, we need to first move an application for RBI for this,

What is the minimum capital for a NBFC?

10 Crore

I wish to enter into finance business, but why I should prefer NBFC over Bank?

NBFCs provide end-to-end solutions with an easy application process and instant approvals making the loan process faster than banks. NBFCs base interest rates are not regulated by the RBI. Therefore, have greater flexibility and offers competitive interest rates.

What are the benefits of registering as a NBFC?

• Can provide loans and credit facilities.
• Can trade in money market instruments.
• Can do wealth management such as managing portfolios of stocks and shares.
• Can underwrite stock and shares and other obligations.
• NBFCs are the last resorts of borrowing; NBFCs are there where banks are not there.
• NBFCs also issue credit cards in India.
• Factoring business, Peer to Peer lending, Account Aggregator business are allowed to an NBFC in India. 

CHECKLIST FOR NBFC INCORPORATION 

What are the documents required for NBFC registration

For NBFC registration, multiple documents are involved, Some of them are as follows:

Copy of Memorandum and Articles of Association. 

Certificate of company incorporation. 

Information about the management along with the future plan of the company. 

List of directors’ profile duly signed by each director. 

CIBIL/credit reports of the Directors of the Company. 

Address proof supporting office location. 

A board resolution on the ‘Fair Practices Code’ is to be passed and the same copy should be attached along with the documents. 

It is issued by the auditor stating that the company does not hold the public deposit and does not accept it as well. 

A scanned copy of the board resolution certifying that the company has not carried out or abruptly stopped any NBFC activity and will not carry any until the registration from RBI is granted.

Information regarding the bank account, balances, loans, credits, etc. of the directors. 

The Certificate specifies owned funds as on the date of the application from the Statutory Auditor.

Audited balance sheet and profit and loss statement along with the directors and auditors report of the preceding three years. 

Self-certified copy of the bank statement and Income Tax Returns. 

Information specifying the company’s future plan, generally for the next 3 years, along with the projection of balance sheets, cash flow statement and income statement.

How does NBFC recover money?

In case of non-receipt of payment on due date, post dated cheques, if available are presented for recovery of dues. 

In case of bouncing of cheque, appropriate legal action is initiated under Indian Negotiable Instrument Act, 1881.

Apply NBFC License, just connect and rest assured for your needs.