Sr. No.

Requirements to be complied with and documents to be submitted to RBI by Companies for obtaining certificate and Registration from RBI as NBFC

1

Certified copies of Certificate of Incorporation and Certificate of Commencement of Business in case of public limited companies.

2

Certified copies of extract of only the main object clause in the MOA relating to the financial business.

3

Board resolution stating that:

a)     the company is not carrying on any NBFC activity/stopped NBFC activity and will not carry on/commence the same before getting registration from RBI

b)     the company has not accepted any public deposit, in the past (specify period)/does not hold any public deposit as on the date and will not accept the same in future without the prior approval of Reserve Bank of India

c)      the UIBs in the group where the director holds substantial interest or otherwise has not accepted any public deposit in the past /does not hold any public deposit as on the date and will not accept the same in future

d)     the company has formulated “Fair Practices Code” as per RBI Guidelines

4

Copy of Fixed Deposit receipt & Bankers certificate of no lien indicating balances in support of NOF

5

For companies already in existence, the Audited balance sheet and Profit & Loss account along with directors & auditors report or for the entire period the company is in existence, or for last three years, whichever is less, should be submitted

6

Copy of the certificate of highest educational and professional qualification in respect of all the directors

7

Copy of experience certificate, if any, in the Financial Services Sector (including Banking Sector) in respect of all the directors

8

Banker’s report in respect of applicant company, its group/subsidiary/associate/holding company/related parties, directors of the applicant company having substantial interest in other companies. The Banker’s report should be about the dealings of these entities with these bankers as a depositing entity or a borrowing entity.

Note: Please provide bankers report from all the bankers of each of these entities and provide the report for all the entities. The details of deposits and loans balances as on the date of application and the conduct of the account should be specified.

Sr. No

PARTICULARS

PROCEDURE

1.

FORMATION OF COMPANY

The first step is to form a New Company registered under the Companies Act 2013. The name must reflect the character of an NBFC. Words such as Finance, Investment, Finvest, Finstock, etc. may be used as part of the name. In general, RBI does not allow names which are not reflecting the characteristics of NBFC.

2.

MINIMUM NET OWNED FUND

The requirement of Minimum Net Owned Fund has been increased from Rs 2 Crores to Rs 10 Crores (Vide RBI Circular DOR.CRE.REC.No.60/03.10.001/2021-22dated 22^nd October 2021. It must be ensured that the Authorised Capital of the NBFC is not less than Rupees Ten Crores.

After the incorporation of a new Company the Paid-up Equity Capital of the Company should suitably rose either at par or premium so as to attain a minimum Net Owned Fund. The Capital to be raised here should be Equity Share Capital and not Preference Share Capital. RBI vide its Notification dated 22^nd October 2021, has brought changes in regulatory minimum net owned fund (which shall be effective from 22^nd October 2022)

But for NBFC-P2P, NBFC-AA, and NBFCs with no public funds and no customer interface, the NOF shall continue to be ?2 crore. Also, there is no change in the existing regulatory minimum NOF for NBFCs - IDF, IFC, MGCs, HFC, and SPD.

The Net Owned Funds would be calculated based on the last audited balance sheet of the Company. Net owned Fund will consist of paid up equity capital, free reserves, balance in share premium account and capital reserves representing surplus arising out of sale proceeds of assets but not reserves created by revaluation of assets. From the aggregate of items will be deducted accumulated loss balance and book value of intangible assets, if any, to arrive at owned funds. Further, investments in shares of other NBFCs and in shares, debentures of subsidiaries and group companies in excess of ten percent of the owned fund mentioned above will be deducted to arrive at the Net Owned Fund.

3.

OPENING OF A BANK ACCOUNT

The entire sum of Rs 2 crores should be kept in a bank in a Deposit Account free from all liens. Normally funds are kept in Fixed Deposit. The RBI at the time of considering the application for the grant of Certificate of Registration verifies the deposits held by the Company with the Bankers.

4.

APPLYING ON-LINE TO RBI

a)     The applicant Company is required to apply online and submit a physical copy of the application along with the necessary documents to the Regional Office of the Reserve Bank of India. The application can be submitted online by accessing RBI’s secured website https://cosmos.rbi.org.in. At this stage, the applicant company will not need to log on to the COSMOS Application and hence user ids are not required.

b)     The company can click on “CLICK” for Company Registration on the login page of the COSMOS Application. A window showing the Excel application form available for download would be displayed.

c)      The company can then download suitable application form (i.e NBFC or SC/RC) from the above website, key in the data and upload the application form.

d)     The company may note to indicate the correct name of the Regional Office in the field “C-8” of the “Annex-Identification Particulars” in the Excel application form.

e)     The company would then get a Company Application Reference Number for the CoR application filed on-line. Thereafter, the company has to submit the hard copy of the application form (indicating the online Company Application Reference Number) along with the supporting documents, to the concerned Regional Office. The company can then check the status of the application from the above-mentioned secure address, by keying in the acknowledgement number.

5.

FILING OF SOME ADDITIONAL DOCUMENTS

In addition to the documents required to be enclosed along with Application Form, the following should also be enclosed:

a)     Copy of E-Form Spice 32

b)     Experience Certificate or Details of Experience of Directors, if any, in NBFC Business

c)      Banker’s Report in the format prescribed by RBI with the request to Bank that original should be directly sent to RBI

d)     Banker’s Report of all the Firms/Company/Proprietorship Concern in which the director holds substantial interest

e)     Board Resolutions in the matter of Application for granting Certificate of Registration, Non-Acceptance of Public Deposits and Non carrying business of Non-Banking Financial Institution without Certificate of Registration.

f)       Board Resolution adopting a Fair Practices Code and a copy of the said Code.

g)     Declaration from Directors to give effect that they are not associated with unincorporated bodies u/s 45-S of RBI Act,1934

The application is to be filed with the Regional Office of RBI whose jurisdiction; the registered office of the Company falls.

6.

GRANTING OF CERTIFICATE

After the same is filed, the same is examined by RBI and further documents and clarifications may be sought from time to time. Finally, if RBI considers that the application is complete in all respects and all required formalities and compliances are met, the RBI issues Certificate of Registration.