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Non Banking Financial Company (NBFC) | CS executive


                                        NBFC (Non-Banking Financial Company)

 

What is “NBFC”?

 

NBFC is a company registered under Companies Act, 2013 or earlier Companies Act or an institution engaged in the business of loans and advances, acceptance of deposits under different schemes and to invest this money in any manner like the acquisition of shares, securities, bonds, hire purchase, etc..  RBI Act, 1934 includes a Financial Institution which is a company or a non-banking institution which is a company having its principal business of receiving the deposits under any arrangement or scheme or in any other manner, or lending in any manner as an NBFC.

 

NBFC may be categorized as:

 

  1. Loan Companies
  2. Investment Companies
  3. Hire Purchase Finance Companies
  4. Equipment Leasing Companies
  5. Mutual Benefit Finance Companies
  6. Housing Finance Companies etc.
  7. Asset Income Approach

 

In order to identify a particular company as an NBFC, consider both, the assets and the income pattern from the last audited balance sheet to decide principal business.

 

Financial Assets are more than 50% of its Total Assets (netted by Tangible Assets)

Income from Financial Assets should be more than 50% of the gross income.

Net owned Fund requirement

Minimum Rs. 200 Lakhs at all times unless otherwise specified.

 

Formation Procedure

 A company with main object clause for carrying out NBFI activities (check object clause)

Obtain catalog of requirements from RBI website

Fill up prescribed form, available on RBI website, according to instructions with the requirements

Fill up the e-form provided in excel format

Get the required certifications of the statutory auditors/chartered accountants (as the case may be)

Submit softcopy on the RBI website before submission of the hardcopy.

Obtain the printout of the successful submission of the softcopy. Mention the date of submission on the print if the date is not appearing in print.

Submit the hardcopy application in duplicate to the regional office of RBI.

Each page in the application file should be numbered.

Prepare the application in triplicate so that a replica is with the applicant for future reference.

Commencement of Business

 

NBFC must commence its business within 6 months from the date of CoR.

If not commenced within 6 months, CoR will stand withdrawn.

No change in control prior to the commencement of its business.


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