Vijendra & Co.s Online NBFC Registration

Non-Banking Financial Companies (NBFCs) are essential to India's quickly expanding financial sector since they offer financial services outside of traditional banking.

With the increasing demand for credit, investments, and fintech innovations, setting up an NBFC has become an attractive business opportunity. At Vijendra & Co, we specialize in facilitating NBFC Registration Online, offering in-depth expertise and seamless assistance.

Overview of the NBFC

An organization formed under the Companies Act of 2013 that offers financial services such as loans, asset financing, investments, leasing, and hire purchase without a complete banking license is known as a Non-Banking Financial Company (NBFC). In contrast to banks, NBFCs are unable to take demand deposits; yet, they might boost economic growth by offering specialized financial services to underserved industries.

The size of the Indian NBFC market

Over the last ten years, the NBFC industry in India has experienced strong expansion. As per the RBI, NBFCs contribute nearly 25% to the total financial assets in India. The sector’s total assets stood at over ?54 lakh crore in 2024 and are projected to grow at a CAGR of 11%-13% over the next five years. Factors like financial inclusion initiatives, the rise of digital lending, and regulatory support have contributed significantly to the expansion of NBFCs.

Types of NBFC

On the Basis of Activities:

• Asset Finance Company (AFC): Financing physical assets like automobiles, machinery, etc.
• Investment Company (IC): Engaged in acquiring securities.
• Loan Company (LC): Providing loans and advances for non-asset-backed financing.
• Infrastructure Finance Company (IFC): Focuses on loans to the infrastructure industry.
• Micro Finance Institution (NBFC-MFI): Provides financial services to low-income groups.

The primary focus of Housing Finance Company (HFC) is the provision of housing loans. Each category requires a specialized approach for NBFC Registration Online.

NBFC Registration: Benefits

Registering an NBFC offers several advantages:

• Access to diversified funding options
• Enhanced credibility and trust among investors and customers
• A broad array of financial services provided inside a controlled environment
• Opportunity to tap into India’s underserved markets
• Flexibility in operations compared to traditional banks

Proper NBFC Registration Online ensures the company operates legally while enjoying these benefits.

Checklist: Documents Required to Register an NBFC

To register a Non-Banking Financial Company, you must prepare the following documents:

• The company's certificate of incorporation
• A thorough business plan
• Net owned fund proof (minimum ?2 crores)
• Bankers' report on the company's financial standing
• Directors' profiles and experience proof
• KYC details of directors and shareholders
• MOA and AOA highlighting financial services activities
• Organizational structure chart
• Three years' worth of audited financial statements, if any

Complete documentation is critical for a smooth NBFC Registration Online process.

Procedure for Non-Bank Financial Companies to Register

The following steps are part of the registration process:

• 1. The incorporation of the company: Register the business in accordance with the Companies Act.
• 2. Infusion of Capital: Make sure that the Net Owned Fund is at least ?2 crores.
• 3. Application Filing: Apply online via RBI's portal.
• 4. Document Submission: Upload all necessary documents.
• 5. Verification: RBI reviews and may seek additional information.
• 6. Grant of License: If satisfied, RBI issues the NBFC license.

A professional approach ensures timely and hassle-free NBFC Registration Online.

Clauses Outlining Penalties for Violations of RBI Regulations

There are severe penalties for breaking RBI guidelines:

• Monetary fines
• Suspension or cancellation of the NBFC license
• Prohibition from further financial activities
• Legal proceedings under RBI Act, 1934

Therefore, continuous adherence post NBFC Registration Online is critical for sustainability.

FDI in NBFC

For the majority of NBFC operations, India permits 100% FDI under the automated route, including:

• Asset financing
• Leasing and hire-purchase
• Housing finance
• Infrastructure finance

However, FDI compliance includes meeting minimum capitalization norms and adherence to sectoral regulations.

Cases of NBFC License Cancellation

An NBFC license may be revoked by RBI in the following situations:

• Failure to commence business within six months
• Non-maintenance of Net Owned Fund requirements
• Insolvency or inability to meet obligations
• Non-compliance with RBI directions or guidelines

Hence, continuous compliance post NBFC Registration Online is mandatory to avoid cancellation.

Required Compliances with the RBI's NBFC License Prior to Business Launch

Before commencing business after obtaining the NBFC license:

• Open a public website disclosing basic information
• Develop a fair practices code
• Appoint a Principal Officer for Anti-Money Laundering (AML) measures
• Set up a Customer Grievance Redressal Mechanism
• Appoint statutory auditors
• File necessary returns to RBI

These steps ensure the NBFC operates within the regulatory framework.

NBFC Annual Compliance

Every NBFC must fulfill annual compliances, such as:

• Providing the RBI with annual returns and audited financial statements
• Ensuring KYC and AML compliance
• Reporting on Fair Practices Code
• Submission of Statutory Auditors' Certificate on NOF compliance
• Adhering to Corporate Governance norms

Penalties or even license revocation may result from noncompliance with requirements. The RBI suggests regulating NBFCs using a scale-based approach (RBI2021).

Scale Based Regulatory Framework (SBR)

In 2021, RBI introduced a Scale Based Regulatory Framework (SBR) for NBFCs to streamline oversight.

NBFCs are separated into four tiers by the framework:

• Middle Layer (ML)
• Base Layer (BL)
• Top Layer (TL)
• Upper Layer (UL)

Each layer has specific compliance, governance, and capital adequacy norms.

A Change of Base Level

The Base Layer includes NBFCs like NBFC-Peer-to-Peer Lending Platform (NBFC-P2P), NBFC-Account Aggregator (NBFC-AA), and smaller NBFCs. These entities are subjected to simplified regulations, with emphasis on governance and risk management practices.

The Board Must Have a Minimum of

Under the new regulations, the Board of an NBFC must have a minimum number of independent directors. This enhances accountability and ensures that decision-making is aligned with the best interests of stakeholders.

Risk Management Committee

NBFCs, especially those classified under the Middle and Upper Layers, must set up a dedicated Risk Management Committee. This committee is responsible for:

• Identifying and mitigating risks
• Developing risk policies
• Monitoring risk exposure regularly

Risk management practices help maintain business stability and regulatory compliance.

Fintech-Powered Non-Bank Financial Institutions: An Advantageous Business Model

Fintech-based NBFCs have become more prevalent as a result of the financial sector's adoption of technology. These businesses use mobile platforms, AI, and data analytics to:

• Simplify loan disbursement
• Lower operating expenses
• Improve customer satisfaction
• Reach a wider audience

The fintech revolution has opened up new avenues for NBFCs to grow and serve previously untapped markets.

NBFCs Must Register to Use Our Services

It is mandatory for all companies seeking NBFC status to register with RBI before offering financial services. Vijendra & Co provides complete assistance in NBFC Registration Online, ensuring compliance with all applicable norms and guidelines.

Why Choose CS Vijendra & Co.

At Vijendra & Co, our expertise in NBFC Registration Online stands unmatched. We bring:

• Years of experience in financial compliance and licensing
• A group of certified chartered accountants and company secretaries
• End-to-end advisory and documentation support
• Timely updates on regulatory changes
• Seamless coordination with RBI and other regulators

We help aspiring NBFCs realize their potential through our deep understanding of regulatory frameworks and financial sector dynamics.