A Non-Banking Financial Company (NBFC) provides banking and other lending services without meeting the legal definition of a bank, which has been incorporated under Companies Act, 2013 or earlier Companies Act, 1956 and Every NBFC has to obtain Commencement of business certificate from RBI as defined under Section 45 I(a) of the RBI Act. NBFC shall not commence or carry on the business of Non- Banking Financial Institution without obtaining a Certificate of Registration issued by the Reserve Bank of India. NBFC registration is can be obtained in 90-120 days.
The principal business of NBFC is providing loans and advances, acquisition of shares, debentures and other stocks issued by Government or other local authorities, insurance business, business, leasing, hire-purchase, etc. Moreover, any other non-banking institution, incorporated as a company under the Companies Act and having principal business of receiving deposits under any scheme or arrangement in one lump sum or in installments, is also a non-banking financial company (NBFC).
In general, NBFC is filling up the gap of financial needs for the organized and unorganized section of the population. In the recent times, banks have targeted big commercial houses and individuals with good credit rating as their prime customers. This provided NBFCs with an opportunity to enlarge its presence in the financial market.
On the basis of nature of activity, they undertake, NBFC registration are categorized into the following:
On the basis of deposits they hold, NBFC registration are being assigned into following two categories:
On the basis of size or minimum capital requirement, NBFC registration is further classified into following two categories:
Procedure for NBFC Registration
Any entity desirous of commencing the business of and being registered as NBFCs shall apply to RBI for the license (CoR) and must also fulfill the following norms:
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