A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 2013 of India, the main operations of NBFC include loans and advances, acquisition of shares, stock, bonds, hire-purchase insurance or chit-fund, but they do not inclu
Satisfied Customers
Global Business Setups
Professionals (CA,CS, Lawyers)
Offices
Before diving into the NBFC registration process, it's essential to understand what an NBFC is and its significance in the financial ecosystem. Non-Banking Financial Companies (NBFCs) are financial institutions that provide services similar to traditional banks but do not hold a banking license. Despite not having a banking license, NBFCs play a crucial role in India's financial system by offering various financial services such as loans, advances, investments, and credit facilities. They cater to a wide range of sectors and segments, providing financial solutions to individuals, small businesses, and even large corporations. They are financial intermediaries registered as companies, indulged in various financial services that range from providing loans and advances, accepting deposits, delivering credit, acquisition of shares, stocks, debenture, bonds, securities, hire-purchase insurance. and play an pivotal role in financial development of our economy. While the Indian financial system is dominated by banks, NBFC’s increase the financial inclusion of the corporate sector, facilitate credit to the unorganized sector & small and local borrowers by supplementing and posing competition to the banking sector in India.
NBFCs are regulated by the RBI under the framework of the Scale Based Regulation (SBR), which categorizes NBFCs based on their size, activity, and perceived riskiness.
The regulatory structure of NBFCs is divided into four layers: Base Layer (NBFC-BL), Middle Layer (NBFC-ML), Upper Layer (NBFC-UL), and Top Layer (NBFC-TL). Each layer has its own set of regulations and compliance requirements. The SBR aims to align the regulatory framework of NBFCs with their changing risk patterns and ensure the stability and growth of the financial sector.
RESTRICTED ACTIVITIES
Following are activities restricted for NBFC's:
1. Investment & Credit Company (NBFC - ICC): (New Category)
In order to provide operational flexibility per the principle of activity-based classification, the RBI has, in a recent update, consolidated or harmonized 3 categories of NBFC’s Namely Loan Companies (LC), Asset Finance Companies (AFC) and Investment Companies, into a single Category named Investment and Credit Company (NBFC-ICC).
➲. Loan Company (LC)
Loan Company means a financial institution that is carrying out Loan disbursal to earn Interest income as its principal business, but it does not include an Asset Finance Company, an equipment leasing company, or a hire-purchase Company. A loan company can undertake the activities performed by a hire-purchase or leasing company. The nature of the business of a loan company, a hire-purchase company, a leasing company is similar, but the funding requirements for these companies are pretty different from each other.
➲. Investment Company (IC)
Investment Companies are those which carry out trading of securities on listed exchanges as a primary business and are also involved in NBFC operations.
➲. Asset Finance Company (AFC)
An Asset Finance Company (AFC) is a non-deposit taking NBFC which is involved in the primary business of financing of physical assets supporting productive/economic, like automobiles, tractors, lathe machines, cranes, generator sets, earthmoving and material handling equipment, moving on own power and general-purpose industrial machines as its principal business. The principal business is defined as aggregate of financing real/physical assets supporting economic activity and income arising from there is more or equal than 60% of its total assets and total income respectively.
2. Infrastructure Finance Company (IFC)
Infrastructure finance companies carry out financing of a minimum of three-fourths of their total assets in infrastructure loans. The Net Owned Funds (NOF) are more than 3 billion and a minimum crediting rating of 'A' with Capital to Risk-Weighted Assets Ratio is 15%.
3. Infrastructure Debt Fund: Non- Banking Financial Company (IDF-NBFC)
IDF-NBFC are companies registered as NBFC to facilitate the flow of long-term debt into infrastructure projects. IDF-NBFC raises resources through Multiple-Currency bonds of minimum 5-year maturity. Only Infrastructure Finance Companies (IFC) can sponsor IDF-NBFCs.
4. NBFC-Factors
NBFC Factors has the principal business of factoring. Factoring is a financial transaction and a type of debtor finance to provide the financial assistance now to cover the invoice amount to be collected at a later date.
5. Gold Loan NBFCs in India
Gold Loan NBFC carry out financing by keeping Gold as security from the customers. In recent years, gold loan NBFCs witnessed an upsurge in the Indian financial market, owing mainly to the appreciation in the gold price and consequent increase in the demand for the gold loan by all sections of society, especially the poor and middle-class society. Growth of gold loan NBFCs is seen both in terms of the size of their balance sheet and their physical presence which in turn compelled to increase their dependence on public funds including bank finance and non-convertible debentures. Aggressive structuring of gold loans resulting from the uncomplicated, undemanding, and fast process of documentation along with the higher Loan to Value (LTV) ratio includes some of the major factors that caused the growth of Gold loan NBFCs.
6. Micro-Finance NBFC (MFI)
Micro Finance Institution (MFI) is a kind of NBFC which offers financial services to the low-income segment of the population. MFIs give loans and offer insurance, deposit, and other services to its members. These companies, MFI also offer credits and other financial services to the representatives of the poor population except for extremely poor which are Below the Poverty Line (BPL). NBFC-MFI is a non-deposit taking NBFC having not less than 85% of its assets in the nature of qualifying assets. Following are the criteria for as asset to be classified as Qualifying Asset:
a. Any Loan disbursed by an a MicroFinance NBFC to a borrower with a rural household annual income not more than ₹ 1,00,000 or any urban and semi-urban household income not more than ₹ 1,60,000;
b. the borrower should not be indebted for more than ₹ 1,00,000;
c. loan of ₹ 15,000 or more shall be granted for a period of 24 months or more with a prepayment option without any penalty;
d. loan should be granted without any collateral;
e. aggregate amount of loans granted by MFI for income generation should be more than 50 % of the total loans granted by such NBFC-MFI;
f. repayment of loan shall be weekly, fortnightly or monthly as per the choice of the borrower.
7. Non-Operative Financial Holding Company (NOFHC)
It is a financial institution through which promoter/promoter groups will be permitted to set up a new bank. It’s a wholly-owned Non-Operative Financial Holding Company (NOFHC) which will hold the bank as well as all other financial services companies regulated by RBI or other financial sector regulators, to the extent permissible under the applicable regulatory prescriptions.
Non-Operative Financial Holding Company (NOFHC) means a non-deposit taking NBFC as referred to in the 'Guidelines for the Licensing of New Banks in the Private Sector'1 issued by Reserve Bank, which holds the shares of a banking company and the shares of all other financial services companies in its group, whether regulated by Reserve Bank or any other financial regulator, to the extent permissible.
8. Mortgage Guarantee Companies (MGC)
MGC is a financial institution for which at least 90 percent of the business turnover is a mortgage guarantee business or at least 90 percent of the gross revenue is from a mortgage guarantee business and a net owned fund of about 100 crores.
9. Systemically Important Core Investment Company (CIC-ND-SI)
CIC-ND-SI is an NBFC undertaking the acquisition of shares and securities which fulfills the following conditions:-
(A) Holds not less than 90 percent of its Total Assets in the form of equity investments, preferential shares, debts or loans in group companies;
(B) Its equity investments (including instruments that are compulsorily convertible into equity shares within a period not exceeding 10 years from the date of issue) in group companies constitute not less than 60% of its total assets;
(C) Except through block sales for dilution or disinvestment purposes, it does not trade in its investments in shares, debts or loans in group companies;
|
Investment activities |
Lending or related activities |
Other activities |
|
➲ Investment Company ➲ Core Investment Company ➲ Non-Operative Financial Holding Company
|
➲ Loan Company ➲ Asset Finance Company ➲ Micro Finance Institution ➲ Infrastructure Finance Company ➲ Infrastructure Debt Fund ➲ NBFC - Factor |
➲ Mortgage Guarantee Company ➲ Peer-to-Peer Lending Company ➲ Account Aggregator
|
Before starting the NBFC registration process, there are certain prerequisites that need to be fulfilled:
Regulatory minimum Net Owned Fund (NOF) for NBFC-ICC, NBFC-MFI and NBFC-Factors shall be increased to ₹10 crore. The following glide path is provided for the existing NBFCs to achieve the NOF of ₹10 crore:
| NBFCs | Current NOF | By March 31, 2025 | By March 31, 2027 |
| NBFC-ICC | ₹2 crore | ₹5 crore | ₹10 crore |
| NBFC-MFI | ₹5 crore (₹2 crore in NE Region) | ₹7 crore (₹5 crore in NE Region) | ₹10 crore |
| NBFC-Factors | ₹5 crore | ₹7 crore | ₹10 crore |
Note: The Net Owned Fund mentioned above shall be available in Company’s bank account in the form of Fixed Deposit at the time of filing of Application for registration of NBFC.
Certificate of Incorporation: This is the certificate that proves the company's legal existence.
Memorandum of Association (MOA) and Articles of Association (AOA): These are the charter documents of the company that define its purpose and the rules governing its operation.
Board Resolution: A formal decision taken by the board of directors of the company in favor of NBFC registration.
Bank Account Details: Details of the bank account where the company maintains its funds.
Certificate of Net Owned Funds: A certificate/proof from banker and auditor indicating compliance with Net Owned Fund Requirements.
CA Certificate: A certificate of Chartered Accountant regarding details of group/ associate/ subsidiary/ holding companies along with details of investments in other NBFCs as shown in the Proforma Balance Shee
Audited Balance Sheet and Profit & Loss Account: These financial statements should be for the last three years.
Income Tax Returns: The company's income tax returns for the last three years.
Details of Partners/Directors: This includes personal details, qualifications, and experience of the partners or directors of the company.
Address Proof: Proof of the registered office address of the company.
Clean Banker Report: A report from the bank stating the company's creditworthiness.
Net Worth Certificate: A certificate that states the net worth of the company.
Credit Report of Directors: A report that provides information about the creditworthiness of the company's directors.
Educational Qualifications of Directors: Proof of the educational qualifications of the company's directors.
Experience Certificate of Directors: Proof of the professional experience of the company's directors.
Declaration from Directors/Partners: Self-declaration by the directors for not being charged with any penal action
Self-attested documents of Directors, & Shareholders:
Diverse Financial Services: NBFCs offer a wide range of financial services, including loans, credit facilities, retirement planning, money markets, underwriting, and merger activities.
Flexibility: They often have more flexible terms and conditions compared to traditional banks, making them more accessible to a broader range of customers.
Promotion of Rural Development: NBFCs play a significant role in promoting rural development, especially in areas where banking facilities are not readily available. They provide credit to the unbanked areas, contributing to the economic growth of these regions.
Filling the Credit Gap: In scenarios where traditional banks are unable to provide loans, NBFCs step in to fill the credit gap. They cater to the diverse financial needs of various sectors.
Innovative Products: NBFCs are known for their innovative financial products tailored to the specific needs of their clients. This innovation helps in attracting a larger customer base.
Risk Diversification: They play a role in diversifying the risk associated with the financial sector. By providing services different from traditional banks, they reduce the risk concentration.
Support to MSME: NBFCs provide significant support to Micro, Small, and Medium Enterprises (MSMEs), which might not have access to traditional banking services.
Higher Returns: Typically, investments like fixed deposits with NBFCs offer higher interest rates compared to banks, making them an attractive option for investors.
Personalized Services: NBFCs often provide more personalized and efficient services to their customers due to their smaller size compared to big banks.
Economic Development: By providing credit to the underserved and unbanked regions, they play a pivotal role in the overall economic development of the country.
Popularity Among Institutional Investors: NBFCs have gained significant traction among institutional investors due to their role in providing credit access to semi-rural and rural India, areas traditionally underserved by banks.
Provides Loans and Credit Facilities: Many businesses and startups prefer availing loans from NBFCs over traditional banks due to faster processing, competitive interest rates, and loan availability even for those with a poor credit history.
Supporting Investments in Property: Investing in property through NBFCs offers advantages such as flexible rates, easy repayment options, and quick processing with acceptable property collaterals.
Trading Money Market Instruments: NBFCs offer softer interest rates on money market instruments like commercial paper, even when the base rate of banks remains unchanged.
Funding Private Education: NBFCs make education loans more accessible with their flexible rates and easy repayment terms.
Facilitates Retirement Planning: They offer various products and services tailored to help individuals plan for their retirement.
Merger and Acquisition Advisory: NBFCs provide expert advice to companies looking to merge with or acquire other businesses.
Wealth Management: They offer services like managing portfolios of stocks and shares, ensuring that individuals and businesses can grow their wealth effectively.
Seek the expertise of an NBFC registration specialist with a decade of experience. Ensure they have a diverse team, including Chartered Accountants, Company Secretaries, legal experts, and seasoned bankers.
Your company name should resonate with financial services. Consider incorporating terms like "Finance," "FinTech," "Capital," "Invest," "Leasing," or "FinServ."
Initiate the process of registering your entity as either a Private Limited or Public Limited company.
Decide on the location of your registered office and delineate your operational territories.
Obtain this certificate from the Registrar of Companies to validate your company's legal status.
Ensure your company's bank account holds the necessary Net Owned Funds, showcasing your financial stability.
Prepare all the necessary paperwork required for the NBFC license application.
Outline a detailed business strategy for the upcoming five years, encompassing:
Submit your application for NBFC registration under the RBI Act, 1934, via the RBI's official portal.
Post your application on the RBI's official site and obtain a unique CARN (Company Application Reference Number) for future correspondence.
Forward duplicate hard copies of your application to the RBI's regional branch for verification.
The regional RBI office will evaluate the authenticity and completeness of your submitted documents.
Post regional verification, your application will be forwarded to the RBI's central office. They will grant the NBFC registration if all criteria under section 45-IA are met.
Once registered, ensure to commence your NBFC's business activities within six months from the Certificate of Registration's issuance date.
Net Owned Funds (NOF) Net owned Fund consists 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 excludes reserves created by revaluation of assets. From the aggregate of items, accumulated loss balance and the book value of intangible assets should be deducted, if any, to arrive at owned funds. 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. The NOF should be computed on the basis of last audited Balance Sheet and any capital raised after the Balance Sheet date should not be accounted for while computing NOF.
Net Owned Fund (NOF) Requirements for NBFCs under the Scale Based Regulation (SBR):
Regulatory Minimum NOF Changes:
Government-owned NBFCs:
NBFCs not availing public funds and not having a customer interface:
The NOF requirements are part of the revised regulatory framework for NBFCs, which is designed to be scale-based, considering the size, activity, and perceived riskiness of the NBFCs.
| Criteria | Banks | NBFCs |
|---|---|---|
| Regulation | Regulated by the Reserve Bank of India (RBI) and Banking Regulation Act. | Primarily regulated by the Reserve Bank of India (RBI) under the RBI Act, 1934. |
| Deposit Acceptance | Can accept demand deposits from the public. | Cannot accept demand deposits. Only a few NBFCs can accept fixed deposits. |
| Payment and Settlement System | Part of the payment and settlement system. Can issue cheques. | Not a part of the payment and settlement system. Cannot issue cheques. |
| Credit Creation | Can create credit (money creation through lending). | Do not have the ability to create credit. |
| Foreign Investment | Foreign Direct Investment (FDI) in banks is subject to strict regulations. | Generally allowed up to 100% FDI, depending on the type of activity of the NBFC. |
| Maintenance of Reserve Ratios | Required to maintain Cash Reserve Ratio (CRR) and Statutory Liquidity Ratio (SLR). | Not required to maintain CRR or SLR. |
| Priority Sector Lending | Mandated to provide a certain percentage of their lending to priority sectors. | No such obligation, except for certain types of NBFCs like Micro Finance Institutions (MFIs). |
| Types of Loans Offered | Offer a wide range of loans including personal, housing, education, etc. | Typically specialize in certain types of loans like equipment leasing, hire purchase, etc. |
| Branch Expansion | Need RBI's approval for opening new branches. | No such restriction for NBFCs. |
| Insurance on Deposits | Deposits are insured by the Deposit Insurance and Credit Guarantee Corporation (DICGC). | Deposits with NBFCs are not insured. |
| Customer Service | Provide a wide range of services including savings accounts, credit cards, ATMs, etc. | Limited services compared to banks, focused mainly on loans and credit facilities. |
Read More on Differences between an NBFC and a Bank
Q. Requirement for registration as NBFC?
A. For geting registered as NBFC the organisation must:
i. Be incorporated as company form which is registere under company act 2013
ii. have a minimum net owned fund of INR 200 lakh
Q. Different categories of NBFC registered with RBI?
A. NBFC's can be classified on the basisi of activities and Deposits.
On the basis of deposits, there are two Types of NBFC get regustered under RBI:
i. Deposit Taking NBFC's
ii. Non deposit Taking NBFC's
On the Basis of Activities NBFC's can be classified in the following categories:
1. Investment & Credit Company (NBFC - ICC): (New Category)
In order to provide operational flexibility per the principle of activity-based classification, the RBI has, in a recent update, consolidated or harmonized 3 categories of NBFC’s Namely Loan Companies (LC), Asset Finance Companies (AFC) and Investment Companies, into a single Category named Investment and Credit Company (NBFC-ICC).
➲. Loan Company (LC)
Loan Company means a financial institution that is carrying out Loan disbursal to earn Interest income as its principal business, but it does not include an Asset Finance Company, an equipment leasing company, or a hire-purchase Company. A loan company can undertake the activities performed by a hire-purchase or leasing company. The nature of the business of a loan company, a hire-purchase company, a leasing company is similar, but the funding requirements for these companies are pretty different from each other.
➲. Investment Company (IC)
Investment Companies are those which carry out trading of securities on listed exchanges as a primary business and are also involved in NBFC operations.
➲. Asset Finance Company (AFC)
An Asset Finance Company (AFC) is a non-deposit taking NBFC which is involved in the primary business of financing of physical assets supporting productive/economic, like automobiles, tractors, lathe machines, cranes, generator sets, earthmoving and material handling equipment, moving on own power and general-purpose industrial machines as its principal business. The principal business is defined as aggregate of financing real/physical assets supporting economic activity and income arising from there is more or equal than 60% of its total assets and total income respectively.
2. Infrastructure Finance Company (IFC)
Infrastructure finance companies carry out financing of a minimum of three-fourths of their total assets in infrastructure loans. The Net Owned Funds (NOF) are more than 3 billion and a minimum crediting rating of 'A' with Capital to Risk-Weighted Assets Ratio is 15%.
3. Infrastructure Debt Fund: Non- Banking Financial Company (IDF-NBFC)
IDF-NBFC are companies registered as NBFC to facilitate the flow of long-term debt into infrastructure projects. IDF-NBFC raises resources through Multiple-Currency bonds of minimum 5-year maturity. Only Infrastructure Finance Companies (IFC) can sponsor IDF-NBFCs.
4. NBFC-Factors
NBFC Factors has the principal business of factoring. Factoring is a financial transaction and a type of debtor finance to provide the financial assistance now to cover the invoice amount to be collected at a later date.
5. Gold Loan NBFCs in India
Gold Loan NBFC carry out financing by keeping Gold as security from the customers. In recent years, gold loan NBFCs witnessed an upsurge in the Indian financial market, owing mainly to the appreciation in the gold price and consequent increase in the demand for the gold loan by all sections of society, especially the poor and middle-class society. Growth of gold loan NBFCs is seen both in terms of the size of their balance sheet and their physical presence which in turn compelled to increase their dependence on public funds including bank finance and non-convertible debentures. Aggressive structuring of gold loans resulting from the uncomplicated, undemanding, and fast process of documentation along with the higher Loan to Value (LTV) ratio includes some of the major factors that caused the growth of Gold loan NBFCs.
6. Micro-Finance NBFC (MFI)
Micro Finance Institution (MFI) is a kind of NBFC which offers financial services to the low-income segment of the population. MFIs give loans and offer insurance, deposit, and other services to its members. These companies, MFI also offer credits and other financial services to the representatives of the poor population except for extremely poor which are Below the Poverty Line (BPL).
7. Non-Operative Financial Holding Company (NOFHC)
It is a financial institution through which promoter/promoter groups will be permitted to set up a new bank. It’s a wholly-owned Non-Operative Financial Holding Company (NOFHC) which will hold the bank as well as all other financial services companies regulated by RBI or other financial sector regulators, to the extent permissible under the applicable regulatory prescriptions.
Non-Operative Financial Holding Company (NOFHC) means a non-deposit taking NBFC as referred to in the 'Guidelines for the Licensing of New Banks in the Private Sector'1 issued by Reserve Bank, which holds the shares of a banking company and the shares of all other financial services companies in its group, whether regulated by Reserve Bank or any other financial regulator, to the extent permissible.
8. Mortgage Guarantee Companies (MGC)
MGC is a financial institution for which at least 90 percent of the business turnover is a mortgage guarantee business or at least 90 percent of the gross revenue is from a mortgage guarantee business and a net owned fund of about 100 crores.
9. Systemically Important Core Investment Company (CIC-ND-SI)
CIC-ND-SI is an NBFC undertaking the acquisition of shares and securities which fulfills the following conditions:-
(A) Holds not less than 90 percent of its Total Assets in the form of equity investments, preferential shares, debts or loans in group companies;
(B) Its equity investments (including instruments that are compulsorily convertible into equity shares within a period not exceeding 10 years from the date of issue) in group companies constitute not less than 60% of its total assets;
(C) Except through block sales for dilution or disinvestment purposes, it does not trade in its investments in shares, debts or loans in group companies;
Q. What are the various prudential regulations applicable to NBFCs?
A. i. Company’s act 2013
ii. Non-Banking Financial (Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2007
iii. Non-Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015
iv. Systemically Important Non-Banking Financial (Non-Deposit Accepting or Holding) Companies Prudential Norms (Reserve Bank) Directions, 2015
Q. What is owned or net owned funds?
A. Owned Fund 'means the sum of the paid-up equity capital, the preferred shares that are compulsorily convertible into equity, the free reserves, the balance in the share premium account and the capital reserves reflecting the surplus arising from the selling of asset proceeds, excluding the reserves produced by the revaluation of the asset after deduction from the accumulated balance of losses, the deferred revenue expenditure and other expenditure. The 'Net Owned Fund' is the sum as mentioned above, minus the sum of the company's investments in the stock of its subsidiaries, companies in the same group and all other NBFCs and the book value of debentures, bonds, outstanding loans and advances, including lease and lease financing and deposits made with subsidiaries and companies in the same group, to the extent that it exceeds 10%.
Q. Non-Deposit taking NBFCs Compliances or returns?
A. NBS-7 A Quarterly statement for NBFC-ND-SI on capital funds, risk weighted assets, risk asset ratio, etc.
Monthly return on NBFCs-ND-SI Essential Financial Parameters.
Returns from ALM:
(I) Declaration of Dynamic Short Term Liquidity in ALM Format [NBS-ALM1] -Monthly,
(ii) Systemic Liquidity Statement in ALM Format [NBS-ALM2] Half yearly,
(iii) Sensitivity Interest Rate Comment in ALM format -[NBS-ALM3], Half Annual.
Q. Is there any ceiling on the interest charged by NBFC to its borrowers?
A. There is no ceiling on the interest rate charged by the NBFC from its borrowers and is governed by the terms and conditions of the loan agreement entered into between the NBFC and the borrower. The RBI has deregulated the interest rates to be charged by financial institutions (other than NBFC- Micro Finance Institution) from its borrowers, subject to the conditon that the NBFCs shall be transparent regarding the rate of interest and shall disclose to its borrowers the manner in which it has arrived such rate of interest to different categories of borrowers. Such declaration can be made in the application form and communicated explicitly in the sanction letter etc.
Q. Whether approval / prior approval of the RBI is required for acquisition/ transfer of shareholding of 26 per cent or more of the paid up equity capital of an NBFC within the same group i.e. intra group transfers?
A. Indeed, a prior approval of RBI is mandatory in all cases of acquisition/ transfer of shareholding of 26 per cent or more of the paid up equity capital of an NBFC. In case of intra-group transfers of 26 percent or more, the NBFC shall submit an application to the RBI, on the letter head of the company, for obtaining prior approval of the Bank. The submission of documents as prescribed at para 3 of DNBR (PD) CC.No. 065/03.10.001/2015-16 dated July 9, 2015 may be required by the RBI for processing the application of the company. If the approval for such change in shareholding is granted without the documents mentioned above, the NBFC would be required to submit such documents after the process of transfer is complete.
Q. What are the Minimum Capital Requirements for ‘Other Financial Services’ activities which are unregulated by any Financial Sector Regulator?
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Minimum FDI capital
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|
Entity |
Activity |
|
|
Fund based activities
|
Unregistered / Exempted |
Unregulated |
US$ 20 mn
|
|
Fund based activities: The following shall be classified as fund based activities: a. Merchant Banking, b. Under Writing, c. Portfolio Management Services, d. Stock Broking, e. Asset Management, f. Venture Capital or AIF g. Custodian Services, h. Factoring, i. Leasing & Finance, j. Housing Finance, k. Credit Card Business, l. Micro Credit, m. Rural Credit |
|||
|
Non-fund based |
Unregistered / Exempted |
Unregulated |
US$ 2mn
|
|
Non-fund based activities: Following are the non-fund based activities: a. Investment advisory services, b. Financial Consultancy, c. Forex Broking, d. Money Changing Business, e. Credit Rating Agencies |
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* Note: Fund and non-fund based activities shall include, but not limited to,the following activities to the extent that they are-
a. not regulated by any financial sector regulator - this shall comprise of the scenarios where the entity is not registered with the concerned sector regulator and/or the entity or activity is exempted under the respective sector regulations; or
b. where only a part of the financial services activity is regulated; or
c. where there is an uncertainty or doubt regarding the regulatory oversight:
Q: Relationship Between Net Owned fund and public deposit to be maintained by NBFC
| Parameter | Description | Applicable Limits/Requirements |
|---|---|---|
| Net Owned Fund (NOF) | Aggregate of paid-up equity capital and free reserves minus certain deductions. | - NBFC-ICC, NBFC-MFI, NBFC-Factors: ₹10 crore. NBFC-P2P, NBFC-AA, NBFCs with no public funds and no customer interface: ₹2 crore |
| Public Deposits and NOF | Amount of public deposits an NBFC can accept based on its NOF. | Varies based on RBI regulations. Often expressed as a multiple of NOF. |
| Capital Adequacy Ratio (CAR) | Measure of an NBFC's capital in relation to its risk-weighted assets. | Specific percentage set by RBI (e.g., 15% of risk-weighted assets). |
| Permission to Accept Deposits | License from RBI allowing NBFCs to accept public deposits. | Only NBFCs with specific licenses and meeting criteria, including minimum NOF. |
| Safety Nets | Measures to protect depositors' interests. | - Investment in approved securities. Maintenance of a reserve fund.Adherence to prudential norms. |
|
Type of Company |
Limit of public Deposits |
|
NBFC with NOF less than |
No access to public deposits |
|
Equipment Leasing/Hire |
1.5 times NOF or Rs.10 crore |
|
EL/HP company with |
4 times NOF |
|
Loan/Investment companies |
1.5 times NOF (higher CRAR of 15%) |
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Catch comprehensive services for Mutual Fund Registration in India with our expert guidance. Navigate SEBI regulations seamlessly, establish your AMC, and unlock investment opportunities. Start now!
Our guide to Alternative Investment Fund (AIF) registration provides an in-depth look into the world of AIFs. We cover all three categories of AIFs - Category I, II, and III, each with its unique focus and benefits. From venture capital funds to hedge fun
CorpZo guides you through Depository Participants Registration, outlining the role, benefits, and eligibility of a DP. Learn about SEBI, NSDL, and CDSL regulations with us.
Payment Aggregator - Cross Border (PA-CB) serves as a facilitator for online cross-border payment transactions associated with the import and export of permissible goods and services. On October 31, 2023, the Reserve Bank of India (RBI) issued a circular
A Collective Investment Scheme (CIS), is an investment scheme in which several individuals come together to pool their money to invest in a particular asset(s) with the motive to share the returns derived from the said investment in accordance with the ag
The SEBI (Alternative Investment Funds) Regulations, 2012 (“AIF Regulations”) also apply to AIFs in the IFSC. The "SEBI" published Operating Guidelines for Alternative Investment Funds in International Financial Services Centres on November 26, 2018 "
An establishment in form of trust or institutions that records and maintains a complete record of transactions of investors for the benefit or convenience of mutual funds houses or listed entities are called as share transfer agents.
Merchant banker is a company and is combination of consultancy and banking services. Activities of merchant banker in India are regulated by SEBI (merchant banker) rule 1992.
Get the competitive edge in the digital payment landscape with Corpzo's expert guidance on obtaining the payment aggregator license in India. We help streamline your payment aggregation services while ensuring compliance with RBI guidelines. Unlock new op
A service providing entities which plays role of intermediate between banks and websites facilitating the communication of transaction information are known as payment gateway.
Organization which is registered under companies act 2013 or 1956 and which facilitate financing activity such as loan, savings, and insurance to the needy people or to those who are incapable of getting loan from banks and other financial institutions d
An Infrastructure Investment Trust (InvIT) is a collective investment scheme, similar to a mutual fund, that allows individual and institutional investors to invest directly in infrastructure projects in exchange for a small percentage of the income as a
CorpZo's services are designed to help businesses navigate the complex process of becoming a Third Party Application Provider within the UPI ecosystem. We ensure compliance with NPCI's SOPs, including adherence to market share cap regulations, and provide
This comprehensive guide provides a detailed overview of the IRDAI IMF registration process, outlining the crucial role of Insurance Marketing Firms (IMFs) in India's insurance sector. It delves into eligibility criteria, financial requirements, and opera
In other words, it is SEBI-registered Online Bond Platform Provider, serves as a facilitator for the buying and selling of bonds. Acting as intermediaries, these platforms furnish investors with a variety of bond investment options and enable seamless bon
Bespoke advisory focused on mission critical legal, financial and business aspects.
At Corpzo, our clients’ success stories speak volumes. Discover how businesses across various industries have leveraged our expertise to achieve their goals. Read firsthand accounts of our commitment to excellence and the impact we've made in supporting their growth and compliance needs.
Working with Corpzo for our Alternative Investment Fund registration was a remarkable experience. Their deep understanding of regulatory requirements and meticulous attention to detail ensured a smooth and efficient process. The team was always available to address our queries and provided invaluable support at every step. With Corpzo's expertise, we successfully registered our AIF without any hurdles. Highly recommended for anyone navigating the complexities of AIF registration!
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At Corpzo, we are dedicated to empowering our clients with valuable knowledge and insights. Our team of experts regularly shares in-depth articles, comprehensive guides, and industry updates on Knowledge Varsity. Whether you're looking for the latest trends in alternative investment funds or need expert advice on navigating the complexities of drug licensing, our resources are designed to keep you informed and ahead of the curve. We believe that informed clients make better decisions, and our goal is to provide you with the expertise you need to succeed.
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