NBFC Registration in India

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Information about NBFC Registration in India

Published on March 10, 2016

Author: EquiCorp

Source: slideshare.net

1. EquiCorp Associates Advocates & Solicitors NBFC Registration in IndiaNBFC Registration in India www.equicorplegal.com

2. Indian Financial System Financial Intermediaries Financial Markets Financial Assets/Instruments Banks NBFC Mutual Funds Insurance Organization Money Market Capital/Securities MarketBanks NBFC Mutual Funds Insurance Organization Leasing Companies Hire-Purchase/Consumer Finance Companies Housing Finance Companies Venture Capital Funds Merchant Banking Organization Credit Rating Agencies Factoring and Forfeiting Org., Stock broking firms Depositories Money Market Capital/Securities Market Primary Market Secondary Market Primary/Direct Indirect Derivatives Leasing Companies Hire-Purchase/Consumer Finance Companies Housing Finance Companies Venture Capital Funds Merchant Banking Organization Credit Rating Agencies Factoring and Forfeiting Org., Stock broking firms Depositories Derivatives Equity Preference Debentures Innovative debt instruments Forward Futures Options Convertible Debentures Non- Convertible Debentures Secured Premium Notes Warrants Mutual Fund-units Security Receipts Pass Through Certificates www.equicorplegal.com

3. Post-1991 Phase Organization of the Indian Financial System Privatization of financial institution Banks Mutual-Fund Insurance Companies Reorganization of Structure DFIs/PFIs Banks NBFCs Mutual-funds Capital Market Money- Market Privatization of financial institution Banks Mutual-Fund Insurance Companies Capital Market Money- Market Primary Stock- exchange Investor Protection: SEBI Prudential Norms: Credit/advance portfolio Investment Portfolio Capital adequacy Prudential Norms: Credit/advance portfolio Investment Portfolio Capital adequacy Exposure Norms: Securitisation, Asset Reconstruction And Enforcement Of Security Interest Asset-Liability Management Credit Risk Management Country Risk Management www.equicorplegal.com

4. NBFC- An Introduction www.equicorplegal.com

5. NBFC Growth Factors www.equicorplegal.com

6. Classification of NBFC’s Equipment Leasing Company Residual non banking company Mutual benefit financial Company Residual non banking company Micro finance companies/i nstitutions Loan Company Mutual benefit financial Company Micro finance companies/i nstitutions Hire purchase finance company Investment company Loan Company www.equicorplegal.com

7. Classification of NBFC’s Asset Finance Companies Investment Companies NBFC since 2006 Loan Companies Infrastructure Finance Companies www.equicorplegal.com

8. Classification of NBFC’s contd. www.equicorplegal.com

9. Can NBFC receive deposit??????? A non-banking institution which is a company and which has its principal business of receiving deposits under any scheme or arrangement or any other manner, or lending in any manner is also a non-banking financial company (Residuary non-banking company). A non-banking institution which is a company and which has its principal business of receiving deposits under any scheme or arrangement or any other manner, or lending in any manner is also a non-banking financial company (Residuary non-banking company). www.equicorplegal.com

10. Category A NBFC A company incorporated under the Companies Act, 1956 and desirous of commencing business of non-banking financial institution It is mandatory that every NBFC should be registered with RBI to commence or carry on any business of non- banking financial institution as defined in clause (a) of Section 45 I of the RBI Act, 1934. A company incorporated under the Companies Act, 1956 and desirous of commencing business of non-banking financial institution 1. The Company should have a minimum net owned fund of Rs 5 crore. ( & Rs. 2 crore for north eastern states) 2. The company is required to submit its application for registration in the prescribed format along with necessary documents for RBI’s consideration It is mandatory that every NBFC should be registered with RBI to commence or carry on any business of non- banking financial institution as defined in clause (a) of Section 45 I of the RBI Act, 1934. RBI issues Certificate of Registration after satisfying itself that the conditions are satisfied www.equicorplegal.com

11. For RBI Registration- Category B NBFC P R U D E N T I A L N O R M S P R U D E N T I A L N O R M S P R U D E N T I A L N O R M S www.equicorplegal.com

12. Registration Process 1. Application for Registration in the prescribed Form containing: - Identification Particulars, - Capital Funds & Risk Assets, - Information on Management. 2. MOA, AOA, Board Resolution, Accounts and Business Plan. 1. Application for Registration in the prescribed Form containing: - Identification Particulars, - Capital Funds & Risk Assets, - Information on Management. 2. MOA, AOA, Board Resolution, Accounts and Business Plan. 1. Application for Registration in the prescribed Form containing: - Identification Particulars, - Capital Funds & Risk Assets, - Information on Management. 2. MOA, AOA, Board Resolution, Accounts and Business Plan. www.equicorplegal.com

13. Registration Process-vetting  Management Background  BOD  Executive  Funding Track record of other NBFCs in the group CR from Bankers Interview of promoters/directors Definitive business plan Auditor’s certificate  Management Background  BOD  Executive  Funding Track record of other NBFCs in the group CR from Bankers Interview of promoters/directors Definitive business plan Auditor’s certificate  Management Background  BOD  Executive  Funding Track record of other NBFCs in the group CR from Bankers Interview of promoters/directors Definitive business plan Auditor’s certificate www.equicorplegal.com

14. Registration Process- rejection & appeal Appeal against the RBI Order rejecting the Application to the Central Government, Ministry of Finance 1. To dispose of financial assets within 3 years from date of rejection/cancellation. 2. If deposit taking – i) repay deposits and ii) report outstanding position on monthly basis (NBS-4) 3. Take up Other objects & change the name 4. Voluntary winding up Appeal against the RBI Order rejecting the Application to the Central Government, Ministry of Finance 1. To dispose of financial assets within 3 years from date of rejection/cancellation. 2. If deposit taking – i) repay deposits and ii) report outstanding position on monthly basis (NBS-4) 3. Take up Other objects & change the name 4. Voluntary winding up Appeal against the RBI Order rejecting the Application to the Central Government, Ministry of Finance 1. To dispose of financial assets within 3 years from date of rejection/cancellation. 2. If deposit taking – i) repay deposits and ii) report outstanding position on monthly basis (NBS-4) 3. Take up Other objects & change the name 4. Voluntary winding up www.equicorplegal.com

15. Continuance of business of NBFC - Certificate from statutory auditors to be submitted to RBI every year. - Confirming that it continue to undertake business of NBFI and therefore requires to hold CoR granted by RBI. - Certificate from statutory auditors to be submitted to RBI every year. - Confirming that it continue to undertake business of NBFI and therefore requires to hold CoR granted by RBI. - Certificate from statutory auditors to be submitted to RBI every year. - Confirming that it continue to undertake business of NBFI and therefore requires to hold CoR granted by RBI. www.equicorplegal.com

16. Change in control/management of a NBFC For all NBFCs:  public notice 30 days before effecting the sale or transfer,  in two newspapers one English and local vernacular language,  jointly by NBFC, transferor and transferee,  within seven days of publication, intimation to RBI For Deposit Accepting NBFCs - Prior approval of RBI - Obligation towards deposit holders For all NBFCs:  public notice 30 days before effecting the sale or transfer,  in two newspapers one English and local vernacular language,  jointly by NBFC, transferor and transferee,  within seven days of publication, intimation to RBI For Deposit Accepting NBFCs - Prior approval of RBI - Obligation towards deposit holders For all NBFCs:  public notice 30 days before effecting the sale or transfer,  in two newspapers one English and local vernacular language,  jointly by NBFC, transferor and transferee,  within seven days of publication, intimation to RBI For Deposit Accepting NBFCs - Prior approval of RBI - Obligation towards deposit holders www.equicorplegal.com

17. Concerned Areas  A large number of NBFCs are working without registration:  Companies working without registration and  Companies rejected by RBI still operating.  Penalties:  Imprisonment 1 to 5 years and  Fine of Rs. 1 lakh to 5 lakhs.  A large number of NBFCs are working without registration:  Companies working without registration and  Companies rejected by RBI still operating.  Penalties:  Imprisonment 1 to 5 years and  Fine of Rs. 1 lakh to 5 lakhs.  A large number of NBFCs are working without registration:  Companies working without registration and  Companies rejected by RBI still operating.  Penalties:  Imprisonment 1 to 5 years and  Fine of Rs. 1 lakh to 5 lakhs. www.equicorplegal.com

18. RBI Registration: Value Addition Briefing Client Filling in Relevant Applications Extensive Experience Value Addition by ECA Stage Short Turn-around timeFilling in Relevant Applications Filing Applications with the RBI/ROC Obtaining client approval for the completed applications In-depth Understanding Professional Expertise Short Turn-around time Liaisoning Obtaining the Registration Reliable contacts High success rate Continued SupportFiling Returns www.equicorplegal.com

19. www.equicorplegal.com

20. Consult the Experts-ECA  There can be different structures for raising funds from Public or giving loans, however, company should look into the options which is best suited for their business.  To know the further details about NBFC/MFI/Nidhi Company and other legal aspects of financial institutions, contact us at admin@equicorplegal.com  There can be different structures for raising funds from Public or giving loans, however, company should look into the options which is best suited for their business.  To know the further details about NBFC/MFI/Nidhi Company and other legal aspects of financial institutions, contact us at admin@equicorplegal.com www.equicorplegal.com

21. Equi Corp Associates, Advocates & Solicitors “Navigating a complex legal system takes knowledge, experience & skill.” About Us ECA more than a Law Firm About Us Equi Corp Associates (“ECA”) is a multispecialty law firm based in New Delhi, India started in 2012 for providing affordable access to legal counsel benefitting start-ups, small and growing businesses, social business enterprises, impact investors and non-profit organizations. ECA boutique service offerings are primarily at the intersection of start-up, sustainable development, social enterprise and investment sectors, advising them about legal aspects involved in modern markets in order to keep our clients in pace with the dynamic competitive environment.ECA is instrumental in advising various social enterprises and start ups in setting up business in India. ECA not only have some of the best legal minds, but the best business minds too: lawyers are intimately familiar with the business environment, and know the emerging risks and opportunities of their industries and practice groups. ECA is also effective in providing match making partner/locating strategic alliance, follow up and representation with Government of India or any other incidental work related to investment or legal guidance in India. One stop legal boutique with service levels at par with international law firms. Our respected clients - from individuals to small businesses to Fortune 500 companies -- turn to us for trusted legal counsel. Full service delivery is achieved by synergies of subject matter expertise of our in-house Lawyers, Chartered Accountants & Company Secretaries. We advise and assist NRI’s/PIO’s, Foreign Investors and Indian entrepreneurs with legal services that enables them to compete with best in world in the modern economy characterised by technology based, venture capital funded, futuristic businesses governed by complex and ever evolving legal and statutory framework. Equi Corp Associates (“ECA”) is a multispecialty law firm based in New Delhi, India started in 2012 for providing affordable access to legal counsel benefitting start-ups, small and growing businesses, social business enterprises, impact investors and non-profit organizations. ECA boutique service offerings are primarily at the intersection of start-up, sustainable development, social enterprise and investment sectors, advising them about legal aspects involved in modern markets in order to keep our clients in pace with the dynamic competitive environment.ECA is instrumental in advising various social enterprises and start ups in setting up business in India. ECA not only have some of the best legal minds, but the best business minds too: lawyers are intimately familiar with the business environment, and know the emerging risks and opportunities of their industries and practice groups. ECA is also effective in providing match making partner/locating strategic alliance, follow up and representation with Government of India or any other incidental work related to investment or legal guidance in India. One stop legal boutique with service levels at par with international law firms. Our respected clients - from individuals to small businesses to Fortune 500 companies -- turn to us for trusted legal counsel. Full service delivery is achieved by synergies of subject matter expertise of our in-house Lawyers, Chartered Accountants & Company Secretaries. We advise and assist NRI’s/PIO’s, Foreign Investors and Indian entrepreneurs with legal services that enables them to compete with best in world in the modern economy characterised by technology based, venture capital funded, futuristic businesses governed by complex and ever evolving legal and statutory framework.

22. ECA’s Network Presence Our Practice Areas Corporate & Commercial Banking & Finance Real Estate & Project Finance Employment & Labour Litigation & Arbitration Tax & Consulting Corporate & Commercial Banking & Finance Real Estate & Project Finance Employment & Labour Litigation & Arbitration Tax & Consulting We specializes in verticals such as Nidhi, Micro- finance, Energy, Start-ups, Social Sector, PE, Retail Trade, Education & Investment in India/Abroad

23. Our Commitment Value  One stop legal boutique where assignments carried out at a fraction of the cost of clients staff  Reduce client staff management time and overhead costs, and increase clients profitability  Enable clients staff to concentrate on more interesting and value-added work Service  Robust management and procedures to ensure delivery on time and on budget  Dedicated one-to-one communication with client, to ensure every project is right first time  Full service delivery is achieved by synergies of subject matter expertise of our in-house Lawyers, Chartered Accountants, Company Secretaries and Tax Consultants Quality  Two-level file review and signoff by expert Lawyers, even for the smallest assignment Value  One stop legal boutique where assignments carried out at a fraction of the cost of clients staff  Reduce client staff management time and overhead costs, and increase clients profitability  Enable clients staff to concentrate on more interesting and value-added work Service  Robust management and procedures to ensure delivery on time and on budget  Dedicated one-to-one communication with client, to ensure every project is right first time  Full service delivery is achieved by synergies of subject matter expertise of our in-house Lawyers, Chartered Accountants, Company Secretaries and Tax Consultants Quality  Two-level file review and signoff by expert Lawyers, even for the smallest assignment Value  One stop legal boutique where assignments carried out at a fraction of the cost of clients staff  Reduce client staff management time and overhead costs, and increase clients profitability  Enable clients staff to concentrate on more interesting and value-added work Service  Robust management and procedures to ensure delivery on time and on budget  Dedicated one-to-one communication with client, to ensure every project is right first time  Full service delivery is achieved by synergies of subject matter expertise of our in-house Lawyers, Chartered Accountants, Company Secretaries and Tax Consultants Quality  Two-level file review and signoff by expert Lawyers, even for the smallest assignment

24. Our Core Strengths Dedicated team of legal professionals with strong deal exposure and knowledge of regulations /compliances across multi industry sectors. Proactive and structured approach. Well defined Project methodology tailored to suit the needs of clients for service delivery. Talented team with experience of working with some of the largest companies in India exposure to leading cross border transactions in India. Experience & proven capabilities to handle Diversified Multi-national Clients i.e. Information Technology, Energy, Manufacturing, Consultancy, Oil & Gas Sector, Retail Trading, Hospitality, and related sectors. Competitive advantage of costing by virtue of expertise and experienced resources. Dedicated team of legal professionals with strong deal exposure and knowledge of regulations /compliances across multi industry sectors. Proactive and structured approach. Well defined Project methodology tailored to suit the needs of clients for service delivery. Talented team with experience of working with some of the largest companies in India exposure to leading cross border transactions in India. Experience & proven capabilities to handle Diversified Multi-national Clients i.e. Information Technology, Energy, Manufacturing, Consultancy, Oil & Gas Sector, Retail Trading, Hospitality, and related sectors. Competitive advantage of costing by virtue of expertise and experienced resources. Dedicated team of legal professionals with strong deal exposure and knowledge of regulations /compliances across multi industry sectors. Proactive and structured approach. Well defined Project methodology tailored to suit the needs of clients for service delivery. Talented team with experience of working with some of the largest companies in India exposure to leading cross border transactions in India. Experience & proven capabilities to handle Diversified Multi-national Clients i.e. Information Technology, Energy, Manufacturing, Consultancy, Oil & Gas Sector, Retail Trading, Hospitality, and related sectors. Competitive advantage of costing by virtue of expertise and experienced resources.

25. Equi Corp Associates, Advocates & Solicitors 1st Floor, NBBC, Inox Towers, Tower-B, Plot No.17, Sector-16 A, Film City, Noida-201301 T: +91 1204797509 Mobile: +919958709189 E-mail: admin@equicorplegal.com Website: www.equicorplegal.com/ www.corporatelawyersdelhi.com Blog: http://equicorplegal.blogspot.in/ Equi Corp Associates, Advocates & Solicitors 1st Floor, NBBC, Inox Towers, Tower-B, Plot No.17, Sector-16 A, Film City, Noida-201301 T: +91 1204797509 Mobile: +919958709189 E-mail: admin@equicorplegal.com Website: www.equicorplegal.com/ www.corporatelawyersdelhi.com Blog: http://equicorplegal.blogspot.in/

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