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NBFC Registration

  • NBFC Registration with Registrar of companies
  • NBFC Business Plan
  • NBFC License from RBI

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MUDS NBFC Unit

Muds is best outlined for providing the customized Advise on Non-Banking Financial Companies/RBI Consultancy

Muds have specialized domain in the following sub segments:

NBFC Registrations
NBFC Merger/Demerger
NBFC Listings in India & Abroad
Prior Approval from RBI for Management Change in NBFC
NBFC Business Re-structuring
NBFC IM & Business Plan
NBFC Takeover & Stake Sale
NBFC Contract Drafting

WHAT IS NBFC

  • Full Form of NBFC: Non-Banking Financial Company
  • Registered under Companies Act, 2013 or earlier Companies Act, 1956
  • Business Activities include: Loans & advances, acquisition of shares/ stocks/bonds/ debentures/ securities that are issued by govt or local authority or other marketable securities of similar nature, like leasing, hire-purchase, insurance business, chit business etc
  • Business Activities does not include: Agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services, sale/ purchase/ construction of immovable property

NBFC REGISTRATION PROCESS

Steps to Incorporate NBFC

  • Step No.1:Form a company with Minimum Net Owned Fund of INR 2 crore (Equity Share Capital & not Preference Share Capital)
  • Step No.2:Open a Bank Account (Keep entire sum of INR 2 crores in a bank’s deposit account which is free from all liens)
  • Step No.3:Apply Online for Certificate of Registration to RBI
  • Step No.4:Submit documents to the Regional Office of RBI (Refer to ‘Documents Checklist’ in Requirements 1 section)
  • Step No.5:Certificate is Granted !
Note: Application once filed, is reviewed by RBI.  Further documents/clarifications may be sought from time to time. If application is considered complete in all respects and all required documents/information are furnished to its satisfaction. RBI grants Certificate
of Registration to carry on business of NBFC

Requirement 1: Documents Checklist (Submit to RBI)

  • Certificate of Incorporation (Certified Copy Issued by ROC)
  • Extract of Main Object Clause in MOA (Clearly depicting Financial Business)
  • Board of Resolution stating the following before getting registration from RBI:
    • Adherence to the “Fair Practices Code (As per RBI Guidelines)
    • Non-carrying out any NBFC activity
    • Non-carrying out of acceptance of any public deposit
  • Audited Balance Sheet & Profit & Loss account along with directors and auditors report (for entire period of company’s existence or last 3 years, whichever is less)
  • Director’s Highest Educational & Professional Qualification (Copy of certificate)
  • Director’s experience in Financial Services Sector, including Banking Sector (Copy of certificate)
  • Details of deposits & loans balances as on date of application & conduct of account (Bankers report)

Requirement 2: Requisite for Registration with RBI

  • Company should be registered under the Companies Act, 2013 OR Companies Act, 1956
  • Company should have Minimum Net Owned Fund of INR 2 crore

What is the Ceiling on Interest Rate on Different Type of Financing Entities?

S.No Type Of Organisation Rate of interest
1. Micro Finance Company
  • The cost of borrowing funds plus 12% margin (Say, if the MFIs borrowed funds at 15%, it can
    loan the funds at 27% or less than that.)
  • Average base rate of 5 largest public sector banks * 2.75 (Say, the average base rate of such
    banks is 9%, then the MFI can lend its funds at 24.75% (9*2.75))
  • The lower of (1) and (2)
2. Nidhi Company

Maximum Rate of Interest on Loan = 7.5% + Maximum rate offered on deposits.

3. Multistate cooperative Society

The Board may frame detailed loan regulations prescribing proportion of
red loans to total loans and advances, proper terms and conditions and the
nature of securities acceptable for loans and advances for different purposes.

4. NBFC

The rate of interest to be charged by the company is governed by the terms and conditions of the loan agreement entered into between the borrower and the NBFCs

5. Micro Finance Company-Sec-8

Same as Micro Finance Company

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