A non-banking financial company (NBFC) is an organization that offers financial products and services, but does not have a banking license. An NBFC provides loans, advances, acquisition of shares, etc. It is important to note that an NBFC is different from a bank in ways like: an NBFC cannot accept savings and current account deposits, cannot issue cheques drawn on itself and its Depositors and investors in the bank do not get a deposit insurance or credit guarantee.

The Reserve Bank of India regulates and supervises Non-Banking Financial Companies (NBFCs) that are engaged in lending, shares, stocks, bonds, etc., or financial leasing or hire purchase or accepting deposits. An NBFC is required to have a license if its assets constitute more than 50 percent of its total assets and income from financial assets constitutes more than 50 percent of the gross income. This is popularly known as the 50-50 test of RBI.

As a result, companies engaged in agricultural operations, industrial activity, purchase and sale of goods, providing services or purchase, sale or construction of immovable property as their principal business and engaged in some financial activity will not require NBFC registration.

Eligibility Requirements to Register a Non-Banking Financial Company

• If your company is not yet registered under the Companies Act 2013 or Companies Act 1956, you should do so soon. registering as a private or public limited company has many benefits. For example, it can help improve your company’s credibility and image. In addition, it can give you access to new markets and opportunities.
• Good CIBIL score or credit rating and Minimum net owned funds shall be Rs. 2 crore or above in the name of company.
• A company should have a business financial plan for at least 5 years in order to be successful.
• Company must not be defaulter under the capital compliance and FEMA.
• Director and Shareholder of company must have financial experience including good net worth.
• There is two type of NBFC license company can apply it and out of two first is Non-deposit accepting NBFCs and Deposit accepting NBFCs.

There are many advantages of registering a NBFC in India. Some of these advantages include:

• Access to a large pool of potential customers: By registering as an NBFC in India, you will have access to a large pool of potential customers. This is because NBFC registration enables you to offer your services to a wider range of people and businesses.
• Increased credibility: Customers are more likely to do business with an NBFC that is registered in India. This is because registration provides increased credibility and transparency, which instils confidence in potential customers.
• Attraction of foreign investment: India is an attractive destination for foreign investment, and registering as an NBFC can help you tap into this market.
• Easier to obtain financing product from banks and other financial institutions listed with RBI
• Can offer a wider range of services such as acceptance of deposit and lending of fund to general public
• Increased credibility with customers and partners
• Improved chances of survival during tough economic times.

Minimum Registration Requirements for setting up NBFC

In order to operate as a non-banking financial company (NBFC) in India, certain requirements must be met. These include registration with the Reserve Bank of India (RBI), minimum paid-up equity capital, and net owned funds requirements. Additionally, NBFCs are subject to prudential regulations and guidelines issued by the RBI from time to time.

To register as an NBFC in India, businesses must first comply with several requirements. Perhaps most importantly, businesses must register with the Reserve Bank of India (RBI). Additionally, businesses need to have a certain amount of paid-up equity capital and net owned funds.

Process of getting NBFC license from RBI

NBFCs play an important role in the Indian financial system by providing credit to individuals and businesses. The process of registering a NBFC in India is relatively simple and can be completed within a few weeks.

The first step is to submit an application to the Reserve Bank of India (RBI) along with the required documents. Once the RBI has approved the application, the company must then obtain a certificate of registration from the Registrar of Companies (ROC). After the ROC issues the certificate, the company can begin operations as a registered NBFC in India.