NBFC is most popular and common terms who wish to start finance / lending business . For startup there some substitutes like Nidhi company Section, Section 8 Micro finance, credit cooperative society. NBFC license provided access of CIBIL Score.

We have written earlier also,

Non-banking financial incorporation (NBFC) are fast emerging as an important segment of Indian economy. NBFC offers almost everything as banks do, performing financial intermediation in a variety of ways, making loans, accepting deposits, and advances, leasing, hire purchase, etc. NBFC can raise funds from the public, directly or indirectly, and can freely lend them to ultimate spenders. The minimum tenure to accept deposits is 12 months and the maximum period of 60 months. NBFC advance loans to the various small wholesale and retail traders and self-employed persons. NBFC is very popular due to attractive interest rates on deposits.

The working and operations of NBFCs are regulated by the Reserve Bank of India (RBI) within the framework of the Reserve Bank of India Act. Section 45-IA provides that no NBFC shall commence or carry on the business of Non- Banking Financial Institution without obtaining a Certificate of Registration issued by the Reserve Bank of India.

A Non-Banking Financial Company (NBFC) Similar To That Of A Bank, Except For The Following Differences:

a) It cannot accept demand deposits

b) It cannot issue cheque drawn on itself

c) Non-banking financial incorporation (NBFC) in d) India is classified under three types:

* Asset finance companies (AFC)

* investment company (IC)

* Loan company (LC)

e) Non-Banking Finance Companies (NBFC) Is Classified Into The Following Categories:

i) Development finance institutions

ii) Investment companies

iii) Discount & guarantee houses

iv) Corporate development companies

v) Venture capital companies

vi) Leasing companies

vii) House finance companies

Advantages Of An NBFC

i) Provides loans and credit facilities to Public

ii) Trading money market instruments

iii) Funding private education & Business

iv) Wealth management

v) Discounting services e.g. discounting of instruments

vi) Underwrite stock and shares, TFCs and other obligations

:

Company Registration

The first step is to form a new Company (Private Limited or Public Limited) under the Companies Act

2. Minimum Net Owned Fund

NOF should be Rs. 200 Lac After the incorporation of a new Company in the form of Equity share capital. The Capital to be raised after incorporation of a company here should be Equity Share Capital and not Preference Share Capital.

3. The Opening Of A Bank Account

The amount which is received post incorporation of the company shall be deposited in a bank account as Fixed Deposit and its must be free from all aliens.

4. Application to RBI for Business Operations.

5. RBI will conduct due diligence and will issue certificate of commencement of business.

Documents Required

From All Directors And Shareholder.

Certified copy of up-to-date Memorandum and Articles of Association of the Company.

Banker's Report in a sealed envelope.

Auditors report about receipt of minimum net owned fund.

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 Sheet.

Hi, there are various NBFC that are operating in INDIA .. You can start a venture as per RBI banking norms

1. Yes there can be foreign investment in NBFC in India.

2. You need to register with the Reserve bank of India , where according to norms and the notifications application shall be scrutinised and licence shall be granted. Further it can be through direct route also.

3.Yes in my opinion also the Loan Company shall be best category for you.

4. Yes there is ceiling the RBI notifies such ceiling through notifications 12.5 % is current rate.

5. Pre-disclosure of pattern is required,

Dear Client,

By Notiifcation in year 2016, by RBI, foreign company can invest 100% in NBFC through the automatic route or the approval route.

Yes,

Any entity desirous of commencing the business of NBFCs must, before applying to RBI for the license, fulfill the following two criteria:

It should be a company registered under Companies Act, 2013 or previous Companies Act, 1956.

It should have minimum net owned funds of INR 2 crore.

You should have minimum one director from NBFC background or senior Bankers as full-time director in the company

Clean CBIL records

Understanding of NBFC / Finance business

Right

Prevailing interest rate prescribed by RBI. Max 12.5%

o apply and obtain NBFC License, the following are the basic requirements:

A Company Registered in India (Private Limited Company or Limited Company);

The company must have minimum Net Owned Fund of Rs.200 lakhs

2) The application for NBFC License must be submitted online and offline with the necessary documents to the Regional Office of the Reserve Bank of India. The following are the documents that needs to be submitted for NBFC License:

Information about the management

Certified copies of Certificate of Incorporation and Certificate of Commencement of Business in case of public limited companies.

Certified copies of up-to-date Memorandum and Articles of Association of the company. Details of clauses in the memorandum relating to financial business.

Copy of PAN/CIN alotted to the company.

Directors’ profile, separately filled up and signed by each director.

Certificate from the respective NBFC/s where the Directors have gained NBFC experience.

CIBIL Data pertaining to Directors of the company

Financial Statements of the last 2 years of Unincorporated Bodies, if any, in the group where the directors may be holding directorship with/without substantial interest.

Board Resolution specifically approving the submission of the application and its contents and authorising signatory.

Board Resolution to the effect that the company has not accepted any public deposit, in the past (specify period)/does not hold any public deposit as on the date and will not accept the same in future without the prior approval of Reserve Bank of India in writing.

Board resolution stating that the company is not carrying on any NBFC activity/stopped NBFC activity and will not carry on/commence the same before getting registration from RBI.

Certified copy of Board resolution for formulation of “Fair Practices Code”.

Statutory Auditors Certificate certifying that the company is/does not accept/is not holding Public Deposit.

Statutory Auditors Certificate certifying that the company is not carrying on any NBFC activity.

Statutory Auditors Certificate certifying net owned fund as on date of the application.

Details of Authorised Share Capital and latest shareholding pattern of the company including the percentages.

Copy of Fixed Deposit receipt & bankers certificate of no lien indicating balances in support of Net Owned Funds.

Details of the bank balances/bank accounts/complete postal address of the branch/bank, loan/credit facilities etc. availed.

Last three years Audited balance sheet and Profit & Loss account along with directors & auditors report or for such shorter period as are available (for companies already in existence).

Business plan of the company for the next three years giving details of its (a) thrust of business, (b) market segment and (c) projected balance sheets, cash flow statement, asset/income pattern statement without any element of public deposits.

Source of the startup capital of the company substantiated with documentary evidence.

Self attested Bank Statement/IT returns etc.

3) The Reserve Bank of India regulates and supervises Non-Banking Financial Companies which are into the principal business of lending or acquisition of shares, stocks, bonds, etc., or financial leasing or hire purchase or accepting deposits

4) NBFC cannot provide higher interest rate than recommended ceiling rate by RBI

1. NBFC is a Company. So permission shall have to be taken from the appropriate authorities for opening a Company. Moreover, for holding or floating a Limited Company in India where maximum share will be in the hands of a foreigner, you shall have to take permission from the MEA and also the RBI.

2. The time to be taken to float the NBFC by a Chinese National in India, if permission is availed, might be around 6 months and cost can not be predicted without getting the details of stock holdings and Capital to be invested etc.

3. You can issue LC and also can transfer money against mortgaging properties.

4. RBI issues guidelines in this regard from time to time.Moreover, market competition will compel you to charge affordable interest rate.

5. The promoters should have the majority of shares of the Company and the same can not be liquidated for a specific period of time.

1. You can start a NBFC in India, being a foreigner.

2. The working and operations of NBFCs are regulated by the Reserve Bank of India (RBI) within the framework of the Reserve Bank of India Act and therefore, you have to procure nbfc licence.To apply and obtain NBFC License, the following are the basic requirements:

A. Company Registered in India (Private Limited Company or Limited Company);

B. The company must have minimum Net Owned Fund of Rs. 200 lakhs.

3. Your company will exactly fit in the category of a loan company, as you won't be doing any asset financing, rather you'll be lending money without without asking them any reason for such loan and the borrower can spend it on whatever they like, unlike AFC.

4.Yes. The NBFCs are allowed to accept/renew public deposits for a minimum period of 12 months and maximum period of 60 months. They cannot accept deposits repayable on demand. NBFCs cannot offer interest rates higher than the ceiling rate prescribed by RBI from time to time. The present ceiling is 12.5 per cent per annum.

5. Prior apporval of the RBI would be required after registration before any change is made in the shareholding of an NBFC, including progressive increases over time, which would result in acquisition/ transfer of shareholding of 26 per cent or more of the paid up equity capital of the NBFC.

Regards.

Non-banking financial incorporation (NBFC) are fast emerging as an important segment of Indian economy

NBFC is very popular due to attractive interest rates on deposits.

Foreigner can also start a NBFC in India.

section 149(3) of the Companies Act, 2013 makes it mandatory for every company to have a Director who has stayed in India for a total period of at least 182 days in the previous calendar year. It may be noted that such a resident Director need not be a citizen of India.

time taken shall be 2 weeks - Shareholders and Directors are Indian.

· 6 weeks - Foreign shareholders and directors.

For NBFC registration you need to have minimum net owned fund of Rs 200 Lakh.

After that application is to be submitted in two separate sets tied up properly in two files. Annex 2 to be submitted duly signed by the director/Authorized signatory and certified by statutory auditors.

The legal complexities of NBFC formation are more complicated and without legal authority and NBFC consultant you might be subject to fines and penalties.

So you can take a help from NBFC Consultant who is responsible to handle all the legal activities, Registration and Licensing of your Company and provide full services in regard to setting up of NBFC and other requirements needed for it.