NBFC Consultancy

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NBFC Consultancy

NBFCs have been playing a constructive role in the economic growth of the country by serving as important lynchpins in the financial system. These companies are the mobilizers of savings of the household sector and the corporate sector has to channelize the same into productive activities of the manufacturing industry and the services sector. Although in India, the NBFCs have been around since many decades, still their growth really started off in the 1990’s and now it is governed with lot of regulations.

Now, Non-Banking Finance Companies (NBFCs) are a constituent of the institutional structure of the organized financial system in India. The Financial System of any country consists of financial markets, financial intermediation and financial instruments or financial products. All these items facilitate transfer of funds and are not always mutually exclusive. Inter-relationships between these are a part of the system Eg Financial Institutions operate in financial markets and are therefore, a part of such markets.

Regulatory Framework For Nbfc:

The NBFC (Non-Banking Financial Company) sector has evolved considerably in terms of its size, operations, technological sophistication and entry into newer areas of financial services and products. NBFCs are now deeply interconnected with the entities in the financial sector, on both sides of their balance sheets. Being financial entities, they are as exposed to risks arising out of counterparty failures, funding and asset concentration, interest rate movement and risks pertaining to liquidity and solvency, as any other financial sector player. At the same time there are segments within the sector that do not pose any significant risks to the system. There is therefore, a felt need to address the risks, without impeding the dynamism displayed by NBFCs in delivering innovation and last mile connectivity for meeting the credit needs of the productive sectors of the economy.

Documents Required of NBFC Consultancy:

Documents required will defer depending on what you are looking forward to. If you have received any communication from Bank being an existing NBFC, you are welcome to connect with us at info@ccoffice.in and we will be more than happy to connect. If you are looking for consultancy in terms of NBFC Registration, below content will be of immense help to you.

For Incorporation of a New Company

  • Proposed Names & Significance of Names
  • Kindly inform us about the Main Objects/Activities to be carried out by the company containing financial business activity
  • Company Details:
    • Authorized Share Capital (Both Number & Amount): _________
    • Subscribed Capital (Both Number & Amount): _________
      (*Amount to be deposited in Bank Account within 180 days)
    • Registered office Address: _________
      • Proof of Registered Office of the Company:
        • Electricity Bill (not older than 2 months & Self-Attested by Owner)
        • Index- II (in case of self-acquired property) or rent agreement/lease agreement.
        • NOC from the Owner of Premises (will be prepared by us)
    • E-Mail Id of the Company: _________
    • Phone No. of the Company: _________
  • Directors Details:
    • Number of Directors: ____
    • Number of Directors having DIN: _____

Details of Subscribers Required: (to be provided for all the directors)

  • DIN:
  • Full Name:
  • Fathers Name:
  • Place of Birth:
  • Occupation:
  • Education Qualification:
  • Personal Mobile No:
  • Personal E-mail ID:
  • Duration of Stay at present Address ______years ______ months.
  • Number of Shares Subscribed (Both Number & Amount):
  • DSC (if not having DSC requirements of same are mentioned below)

Documents of Directors Required: (to be provided for all the directors)

  • KYC of all the directors (self-attested).
  • Passport Size Photograph/Scanned Copy of Photo of all the directors in JPG format whose size should not exceed 100 KB and photo should be clear.

Additional documents required for Directors not having DIN:

Identity Proof of all directors- any one of the following (self-attested in BLUE INK):

  • Voters Identity Card
  • Passport
  • Driving License

Address Proof of all Directors (Should be in the name of respective person): - any one of the following (not older than 2 months)- self attested in BLUE INK

  • Electricity bill or
  • Telephone bill or
  • Mobile bill or
  • Bank statement

FOR OBTAINING NBFC LICENSE

Sr.No

                                                               DOCUMENTS

1.

Certified Copies of Certificate of Incorporation of the Company

2.

Certified Copies of Memorandum and Articles of Association of the Company. Extract of MOA containing clauses relating to financial business activity.

3.

Details of the Management of the Company

4.

 Certified copy of PAN Allotted to the Company

5.

Certified copy of Board Resolution stating that 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

6.

Certified copy of Board Resolution for formulation of Fair Practices Code as per RBI Guidelines

7.

Certified copy of Board Resolution to the effect that the company has not accepted public funds in the past/does not hold any public fund as on the date and will not accept the same in the future without the approval of Reserve Bank of India

8.

Certified copy of Board Resolution stating the Unincorporated Bodies 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

9.

Copy of Fixed Deposit receipt & Bankers certificate of no lien indicating balances in support of Net Owned Fund

10.

Brief profile of the Directors of the Company and signed by each Director

11.

CIBIL Data pertaining to Directors of the Company

12.

Details of Authorised Share Capital and latest shareholding pattern of the company including the percentages.

13.

Details of the bank balances/bank accounts/complete postal address of the branch/bank loan/credit facilities etc availed

14.

Self-attested Bank Statement/IT Returns etc.

15.

Source of the startup capital of the company substantiated with documentary evidence

16.

Statutory Auditors Certificate certifying that the Company is/does not accept/is not holding Public Deposit/is not carrying on any NBFC activity/Net Owned Fund as on the date of application

17.

Last three years Audited Balance Sheet and Profit & Loss account along with directors & auditors report or for such shorter period as are available (for companies already in existence.

18.

Business plan of the company for the next three years giving details of it’s (a) thrust of business, (b) market segment, and (c) projected balance sheets, cash flow statement, asset/income pattern statement without any element of public deposits.

19.

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.

20.

Any other documents as may be required by RBI

Features Of NBFC Consultancy

Revised Scale Based Regulatory Framework For Nbfcs:

Reserve Bank of India vide its Notification RBI/2021-22/112 DOR.CRE.REC.No.60/03.10.001/2021-22 on 22nd October 2021 brought a new regulatory structure for NBFCs i.e Scale Based Regulation (SBR) whose guidelines will be effective from 1st October 2022.

Four Layers Of Nbfcs:



References To Nbfcs W.e.f 01st October 2022):

It is clarified that existing NBFC-ND-SIs having asset size of ₹500 crore and above but below ₹1000 crore (except those necessarily featuring in Middle Layer) will be known as NBFC-BL.

Changes In Net Owned Fund For All Layers Of Nbfcs:

NBFCs

CURRENT NOF

BY MARCH 31,2025

BY MARCH ,2027

NBFC- Micro Finance Institution

₹5crore (₹2 crore in NE Region)

₹7crore (₹5 crore in NE Region)

₹10crore

NBFC-ICC

₹2crore

₹5crore

₹10crore

NBFC-Factors

₹5crore

₹7crore

₹10crore

For NBFC-P2P, NBFC-AA, and NBFCs with no public funds and no customer interface, the NOF shall continue to be ₹2 crore. It is clarified that there is no change in the existing regulatory minimum NOF for NBFCs – IDF, IFC, MGCs, HFC, and SPD.

There shall be no difference in the NOF Requirement for NBFCs registered in the NE Region.

Changes In Npa Classification:

The extant NPA classification norm stands changed to the overdue period of more than 90 days for all categories of NBFCs. A glide path is provided to NBFCs in Base Layer to adhere to the 90 days NPA norm as under –

NPA Norms

Timeline

>150 days overdue

By March 31, 2024

>120 days overdue

By March 31, 2025

>  90 days overdue

By March 31, 2026

Explanation: The glide path will not be applicable to NBFCs which are already required to follow the 90-day NPA norm.

Frequently Asked Questions

The effective date of the Guidelines is 1st October 2022 except the ceiling of ₹1 crore per borrower for financing subscription to Initial Public Offer (IPO). NBFCs can fix more conservative limits shall come into effect from 1st April, 2022.

NBFCs Base Layer (NBFC-BL) shall be subject to regulations as currently applicable to NBFC-ND, except for the changes mentioned i.e Net Owned Fund and NPA Classification. NBFC-P2P, NBFC-AA, and NOFHC shall be subject to extant regulations governing them.

NBFCs Middle Layer (NBFC-ML) shall be subject regulations as currently applicable for NBFC-ND-SIs, NBFC-Ds, CICs, SPDs and HFCs, as the case may be, except for the changes mentioned i.e. Net Owned Fund and NPA Classification.

NBFCs lying in the Upper Layer (NBFC-UL) shall be subject to regulations applicable to NBFC-ML in addition to the changes mentioned i.e Net Owned Fund and NPA Classification.

Regulatory revisions applicable to lower layers of NBFCs will automatically be applicable to NBFCs residing in higher layers, unless stated otherwise.

HOW COMPLIANCE CALENDAR LLP CAN HELP YOU?

RBI has brought many changes in the regulatory framework for NBFCs. The NBFCs Regulations governing NBFCs (Non-Banking Financial Companies) are too vast and complex for which one would require experienced NBFC Consultant who can provide you legal guidance and knowledge regarding understanding the complex structure of NBFCs i.e NBFC Company Registration, Different kinds of NBFCs, Compliance of RBI Regulations, Companies Act Compliances, RBI Returns etc. We at Compliance Calendar LLP has a team of professionals who can provide you proper consultation in understanding and complying the laws, rules & regulations governing NBFCs in an efficient and time saving manner. If you are looking for NBFC Consultancy, you are welcome to connect with us at info@ccoffice.in or call us at +91-9988424211 to book your one-time free consultation and we will be more than happy to help you out.