How to do registration of NBFC with the RBI in 2022?

What are NBFC functions, registration, fees, requirements, and many more……

Hello friends, welcome to the reefindia.org blog. In this article, I will discuss NBFCs. What are the functions of NBFC, how to do registration of NBFC with RBI, what documents are required for registration, and what procedure is followed? I will discuss the very important information which is generally asked by entrepreneurs, small businessmen or industrialists. So let’s start

Now the most common question asked is,

NBFC with the RBI in 2022?
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What do you understand by NBFC?

The full form of NBFC is a Non-Banking Financial Company registered under the Companies Act 1956. The main function of NBFC is providing loans and advances to small businesses, possessing loans/equity/shares/debentures/securities issued by the Government or any local authority. These acquisitions are devoid of institutions that are engaged in agricultural activities, industrial activities, and the purchase or sale of any service or property. The prime business of NBFC is receiving deposits under any scheme and lending it in any other manner.

How NBFCs are different from banks?

Like banks, NBFC also lends money and make the investment. But there are some differences which should be looked at:

  • Unlike banks, NBFCs do not accept demand deposits.
  • NBFCs can not issue any cheque on behalf of itself and it is not a part of the payment and settlement system.

Unlike banks, depositors of NBFC do not avail the benefits of deposit insurance facilities and Credit Guarantee Corporations.

Also read: MSME loan eligibility for new business in 2022

Is it mandatory for any company to register with the RBI?

Yes, under the RBI act 1934, every company needs a certificate of registration from the bank and net owned funds (NOF) of Rs. 25 lakhs. However, there are some exceptions. For example, companies like Venture Capital Fund, stock Broking companies having registration with SEBI, insurance company holding a certificate issued by IRDA, Nidhi companies defined under section 620A of RBI Act 1956, chit fund companies defined under clause b of section 2 of chit funds act, 1982.

What are the basic requirements for registration with the RBI?

There are mainly 2 necessary things that you need for registration with the RBI. These are as follows:

  • Your company should be registered under section 3 of the Companies Act, 1956

Your company should possess a minimum Net Owned Fund of Rs. 200 lakh. However, there are different criteria for specialized NBFCs. For more details, you can check here: https://rbi.org.in/Scripts/FAQDisplay.aspx?dId=47939

What is the procedure for registration with the RBI?

The registration with the RBI can be done in both ways, online as well as offline. The step by step procedure for submitting the application is as follows:

Step 1: Open the website link https://cosmos.rbi.org.in/ and here you do not need to log on to the COSMOS application.

Step 2: The applicant company can click on the “CLICK” for registration.

Step 3: Download the excel application form from the above website.

Step 4: Fill the form with the required data and submit it there only.

Step 5: Then, the company would get a reference number for CoR application filed online.

Step 6: The last step is to submit the physical copy of that application form with attached documents to your concerned regional office of the RBI.

What is the registration fee for NBFC in India?

No doubt, registration of NBFC or getting a license from the RBI is quite expensive. But the question is what makes it so costly🤔. The answer is quite simple. In general terms, for registering your company with RBI, approximately 3.5-4 lakh is required having NOF of Rs. 2 crore but this is not enough. There are some additional charges which you might be paying for registration.

  • The documentation process is very complex hence in case you need any consultation you need to pay charges.
  • The strict regulation and compliances of the RBI is also cumbersome task.
  • Although NOF is not part of the registration fee it is the minimum amount after having that only you are eligible to apply for registration.
In the end, if I estimate the total amount required for getting a license, it will be around 10-15 lakhs.

Conclusion: NBFCs play a vital role in strengthening the economy by lending to various infrastructure projects which are very important especially for developing countries like India. They also help in generating employment and the development of financial markets.

Thanks:)

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