Introduction to Non-Banking Financial Companies (NBFCs) in India

NBFCs play a crucial role in the Indian financial landscape by providing credit and financial services to various segments of the population. They often cater to borrowers who may not have access to traditional banking channels, thus contributing to the overall economic development.

Step-by-Step Process to Register a NBFC in India

Incorporate the Company

The first step is to register a public or private limited company under the Companies Act, 2013 with the Ministry of Corporate Affairs (MCA). Obtain a Certificate of Incorporation and ensure that the company’s main business objective is to carry out financial activities.

Meet the Minimum Net Owned Fund (NOF) Requirement

Ensure that the company has a minimum NOF of INR 2 crore (or as per the latest RBI guidelines). The NOF includes paid-up equity capital and free reserves, minus accumulated losses and intangible assets.

Prepare a Detailed Business Plan

Develop a comprehensive business plan outlining the proposed NBFC’s operations, target market, financial projections, and management team. This will be required during the application process with the Reserve Bank of India (RBI).

Submit the Application to RBI

To submit an application for registration as a Non-Banking Financial Company (NBFC) with the Reserve Bank of India (RBI), you need to follow a detailed process and provide several required documents. Here’s a step-by-step guide to help you with the process:

1. Create an account on the RBI’s online portal: Visit the RBI’s COSMOS website (https://cosmos.rbi.org.in) and create an account for your company.

2. Fill out the application form: Log in to your account and fill out the online application form (Form NBS-1) with the required information about your company and its directors.

3. Upload the required documents: After completing the online application form, you need to upload the following documents:

   a. Certified copies of Certificate of Incorporation and Certificate of Commencement of Business.

   b. Memorandum and Articles of Association (MOA and AOA).

   c. Board resolution confirming the decision to start an NBFC business.

   d. Documents related to the company’s directors, such as DIN, DSC, PAN, and KYC (including identity proof, address proof, and photographs).

   e. Audited financial statements and Income Tax Returns for the past three years (if applicable).

   f. Detailed business plan.

   g. Banker’s report regarding the company’s Net Owned Fund (NOF), credit facilities availed, and conduct of the account.

   h. Any other documents as required by the RBI.

4. Submit the physical copy of the application: After submitting the online application and uploading the documents, you need to send a physical copy of the application along with the required documents to the Regional Office of the RBI.

5. Payment of application fees: The RBI may require the payment of application fees. You’ll need to pay the fees as per the RBI’s guidelines.

Sample business plan of NBFC for RBI submission:

Executive Summary:

• Brief overview of the company
• Vision and mission statement
• Management team

Company Description:

• Legal structure (public or private limited company)
• Date of incorporation
• Registered office address
• Brief history (if applicable)

Services Offered:

• Types of financial products and services the NBFC plans to offer (e.g., loans, leasing, hire-purchase, investments, etc.)
• Target market segments (e.g., small businesses, individuals, etc.)

Market Analysis:

• Market size and trends
• Target market demographics
• Competitive landscape
• SWOT analysis (Strengths, Weaknesses, Opportunities, and Threats)

Marketing Strategy:

• Positioning statement
• Marketing channels and tactics
• Pricing strategy
• Sales strategy and distribution channels

Operations and Management:

• Organizational structure
• Roles and responsibilities of key personnel
• Hiring and staffing plans
• Policies and procedures for regulatory compliance

Financial Projections:

• Projected income statement for the next 3-5 years
• Projected balance sheet for the next 3-5 years
• Projected cash flow statement for the next 3-5 years
• Assumptions and notes to the financial projections

Risk Analysis:

• Identification of potential risks
• Risk mitigation strategies

Appendices:

• Resumes of key personnel
• Relevant market research data
• Any other supporting documents

Please note that the above sample is a generic outline and should be tailored to your specific NBFC’s requirements.

Useful Links

• Reserve Bank of India (RBI): https://www.rbi.org.in/
• Ministry of Corporate Affairs (MCA): http://www.mca.gov.in/

By following this comprehensive guide, aspiring entrepreneurs can navigate the