The NBFC’s have come a huge way in terms of their operation, size, technology, and financial products. The first and the foremost need for any NBFC to begin nay operation is obtaining Certificate of Registration from the RBI to carry out the operations.
The RBI has tightened rules for the so-called ‘shadow banks’, raising the minimum capital requirements and restricting the deposit with a few changes that will protect consumers and the market without suppressing the growth.
The minimum capital requirements of NBFC incorporated before April 21, 1999 is 25 lakhs. After April 1999, the limit was increased to 200 lakhs. However, the prescribed capital will be gained by the following timeline –
1. 100 lakh by the end of March 2016
2. 200 lakh by the end of March 2017
The Reserve Bank of India has proposed a minimum paid up capital requirement of small banks at Rs 100 crore. The minimum paid up capital requirement of both payments banks and small banks is kept at Rs. 100 crore of which the promoters’ initial minimum contribution will be at least 40 per cent, to be locked in for a period of five years. The shareholding of the promoters can be brought down gradually to 26 per cent within 12 years from the date of commencement of business of the bank.
The companies aiming to achieve the above capital requirements must also submit a statutory auditors certificate showing agreement with the above two revised levels at the end of each year. Any NBFC which is unable to fulfill the above limits within the given frame of mind will not be eligible to hold CoR as NBFCs and the Reserve Bank will initiate the process for cancellation of CoR against the NBFCs.
To know more about NBFCs, contact Gupta S & Associates under the brand name of Muds, a leading CS firm in Delhi.