The process of obtaining an NBFC license in India: A step-by-step guide

1. The process of obtaining an NBFC license in India: A The process of obtaining an NBFC license in India: A step step- -by by- -step guide step guide Are you looking to start a Non-Banking Financial Company (NBFC) in India? If yes, then obtaining an NBFC license from the Reserve Bank of India (RBI) is the first and foremost requirement. This article will guide you through the process of obtaining an NBFC license in India, step-by-step. Table of Contents Introduction to NBFCs Eligibility criteria for NBFCs Types of NBFCs in India Pre-requisites for applying for an NBFC license The application process for an NBFC license RBI scrutiny of the application Post-application process for an NBFC license Conclusion FAQs

2. Introduction to NBFCs NBFCs are financial institutions that provide banking services without holding a banking license. These institutions are involved in various activities like loans, investments, leasing, hire purchase, and more. NBFCs have become popular in India in recent years, and the number of NBFCs has increased significantly. Eligibility criteria for NBFCs The RBI has set certain eligibility criteria for obtaining an NBFC license in India. The applicant must fulfill the following requirements: The company must be registered under the Companies Act, 2013. The minimum net owned fund (NOF) of the company should be Rs. 2 crore. The company should have a good track record of repayment of loans and other financial obligations. The management of the company should be competent and should have experience in the financial sector. Types of NBFCs in India In India, there are different types of NBFCs. The following are the types of NBFCs: Asset Finance Company (AFC) Investment Company (IC) Loan Company (LC) Infrastructure Finance Company (IFC) Systemically Important Core Investment Company (CIC-ND-SI) Non-Systemically Important Core Investment Company (CIC-ND-NDSI) Pre-requisites for applying for an NBFC license Before applying for an NBFC license, certain pre-requisites need to be fulfilled. The following are the pre-requisites: 1.The company should have a proper business plan and should clearly define its financial activities. 2.The company should have a registered office and a proper communication address. 3.The company should have a minimum of two directors with experience in the financial sector.

3. The application process for an NBFC license The application process for an NBFC license in India involves the following steps: Create an account on the RBI's online portal for NBFCs. Fill in the application form and attach the required documents. Submit the application fee of Rs. 5,000 along with the application. After submission, take a printout of the application form and send it to the regional office of the RBI. RBI scrutiny of the application After receiving the application, the RBI scrutinizes the application and checks for the following: 1.The company's background, including its management and financials. 2.The source of funds for the company. 3.The proposed financial activities of the company. Post-application process for an NBFC license After the scrutiny of the application, the RBI may ask for additional documents or clarification on the application. Once the RBI is satisfied with the application, it grants the NBFC license. Conclusion Starting an NBFC in India requires a lot of planning and preparation. The process of obtaining an NBFC license can be time-consuming, and there are many legal requirements to be met. However, if you fulfill the eligibility criteria and follow the application process correctly, you can obtain an NBFC license from the RBI.