NBFC Registration Online – Time, Process, Fees, Documents, Status in India

The eligibility criteria for some key NBFC types are as follows:

Registering a Non-Banking Financial Company (NBFC) in India involves a series of steps, each governed by specific regulations under the oversight of the Reserve Bank of India (RBI). Here is a step-by-step guide in tabular format, including estimated time, the responsible authority, and applicable fees

Please note:

• Company Incorporation: Register the company under the Companies Act, 2013, with the Registrar of Companies (RoC) via the MCA portal.
• PAN & TAN: Mandatory for financial transactions and tax deductions.
• Open a Bank Account: Necessary for transactions and to show the NOF.
• Increase NOF to ₹2 Crore: Essential eligibility criterion for applying as an NBFC with the RBI.
• Obtain Credit Reports: To ensure the directors and significant shareholders meet the “fit and proper” criteria.
• Prepare Detailed Business Plan: Including financial projections, operational plans, and compliance strategies.
• Application for NBFC License: Compile and submit the application online through the RBI’s COSMOS website, along with necessary documents.
• RBI’s Due Diligence & Background Checks: The RBI will verify the documents, business plan, and compliance with the “fit and proper” criteria.
• Receipt of Certificate of Registration (CoR): Upon satisfaction, the RBI issues the CoR, allowing the company to operate as an NBFC.

The above time estimates are indicative and can vary based on individual cases, document completeness, and the current workload of the RBI. The process from company incorporation to receiving the NBFC license can take anywhere from 6 to 12 months, depending on various factors, including the speed of document submission, RBI’s response time, and compliance with regulatory requirements.

Below is a factual list of required documents and suggestions to ease the preparation process:

1. Company Incorporation Certificate: Issued by the Ministry of Corporate Affairs (MCA) upon the registration of the company. Ensure all company details are accurate and reflect the current status.
2. Memorandum of Association (MoA) and Articles of Association (AoA): Clearly stating the financial business as one of the main objectives. It’s advisable to have these documents prepared by a legal professional specializing in corporate law to ensure compliance with regulatory requirements.
3. Board Resolution: Stating the company’s intent to operate as an NBFC, authorizing the submission of the application to the RBI, and committing to not accept deposits until obtaining a license. Having a board meeting with clear agenda items can streamline this process.
4. Audited Financial Statements: For the last three years, if applicable, demonstrating the company’s net owned fund (NOF) of at least ₹2 crore. Engage a certified accountant or audit firm well-versed in financial regulations to prepare these documents.
5. Bank Account with a Minimum NOF: Proof of NOF to be maintained in a fixed deposit and a certificate from the company’s auditor certifying the same. Opening a fixed deposit account specifically for this purpose can simplify the verification process.
6. Directors’ Profile: Detailed profiles of each director, including their qualifications, experience, and any directorships in other companies. Keeping updated professional profiles of directors can expedite this process.
7. Fit and Proper Criteria Certification: For all directors, based on RBI guidelines, including declarations by directors regarding any criminal background, financial soundness, etc. Regular internal checks and updates on directors’ status can help in maintaining compliance.
8. Credit Reports of the Directors and the Company: Obtained from a recognized credit bureau like CIBIL. It’s advisable to check and improve credit scores before applying, if necessary.
9. Detailed Business Plan: Including the business model, market analysis, operational plans, financial projections, and compliance framework. Engaging with financial consultants or business plan experts who understand the NBFC sector can enhance the quality and acceptability of the plan.
10. KYC Documents: For directors and shareholders holding 10% or more in the company, including identity proof, address proof, and PAN. Keeping digital copies of these documents readily available can speed up submissions.
11. Organizational Structure and Management Chart: Showing the hierarchical structure and decision-making process within the company. Using organizational chart software can help create a clear and professional representation.
12. CERSAI Registration Certificate: If applicable, for companies involved in asset financing. The registration can be done online through the Central Registry of Securitisation Asset Reconstruction and Security Interest of India (CERSAI) portal.
13. Other Regulatory Compliances: Proof of compliance with other financial sector regulations, if applicable (e.g., SEBI, IRDA).

We can divide the softwares into two groups: “Must-Have” for essential operations and compliance, and “Good to Have” for enhanced efficiency, customer experience, and advanced analytics.

Must-Haves are:

• Core Banking System (CBS): Supports day-to-day banking operations, integrating front-end and back-office tasks.
• Loan Management System (LMS): Manages the entire loan lifecycle from origination to servicing, crucial for NBFCs focusing on lending.
• Customer Relationship Management (CRM) Software: Essential for managing customer interactions, improving service, and maintaining relationships.
• Accounting and Financial Management Software: Necessary for managing finances, ensuring accurate financial reporting, and compliance with accounting standards.
• Compliance Management System: Aids in adhering to regulatory requirements, crucial for avoiding penalties and ensuring operational legitimacy.
• Risk Management System: Identifies, assesses, and mitigates risks, essential for maintaining financial stability and customer trust.
• Document Management System (DMS): Manages electronic and paper documents, vital for record-keeping and regulatory compliance.
• Cybersecurity Solutions: Protects sensitive data and financial information from cyber threats, essential for customer trust and regulatory compliance.
• Payment Processing and Gateway Solutions: Facilitates secure and efficient processing of payments and fund transfers, crucial for customer transactions.

Good to Haves are:

• Business Intelligence (BI) and Analytics Tools: Offer insights into operations, customer behavior, and market trends, supporting informed decision-making.
• Human Resource Management System (HRMS): Automates HR tasks, enhancing workforce management and operational efficiency.
• Mobile and Online Banking Platforms: Enhance customer experience by providing convenient access to financial services anytime, anywhere.
• Cloud Computing Services: Offer scalable and flexible IT infrastructure, facilitating data accessibility and remote work.
• Artificial Intelligence (AI) and Machine Learning (ML) Tools: Improve decision-making in lending, risk assessment, and customer service through advanced analytics and chatbots.

• Technology Solutions: Roopya offers technology solutions for various financial services, including loan origination, collections, and customer relationship management (CRM). These tools could streamline operations for a new NBFC, especially in areas like loan application processing, document management, and automated workflows.
• Regulatory Compliance: Roopya platform is compliant to RBI regulations and which can be complex for new NBFCs.
• Data and Analytics: Roopya has experience in data analytics and risk management for financial institutions. These could potentially help a new NBFC develop credit scoring models, assess potential borrowers, and manage risks effectively.
• Market Reach and Partnerships: Roopya Network can give new NBFCs and instant access to other financial institutions or distributors that could help the new NBFC reach customers and distribute their products.