NBFC are those companies that provide various financial and non-financial services. NBFC is a Private or Public Limited Company registered under the Companies Act, 2013, and also has to obtain a Certificate of Registration from RBI. They work differently from commercial banks and cooperatives and do not need to hold a banking license.

Eligibility/Requirements for registering NBFC

· Good credit stores with no defaults.

· Minimum Net Owned Fund (NOF) of Rs.2 crores.

· Business plan for next five years.

· 1/3rd of the total number of directors must possess finance experience

· Registration is compulsory.

· If foreign investment involved, then the company must comply with FEMA Act.

Documents required for registration of NBFC

1. Proof of identity of all the shareholders and directors. Such documents include   Passport, Driving license, Voter Id (Self   attested copy)

2. Proof of address of all the directors and the shareholders. Such documents include   bank statements, electricity bill, water bill, gas bill and telephone (should   not be older than 2 months) (Self-attested copy)

3. Certificate   of Incorporation, MOA, and AOA of the company

4. Proof of address of the company.

5. Company’s GST number and PAN card copy.

6. Net worth certificate of Directors Shareholders and company.

7. Educational qualification proof of Directors.

8. Resolution from the company’s member of the Board for approval of its formation.

9. Bank account details of the company with NOF deposited in it and well audited for the last 3 years.

10. Report from the bank with no lien remark on the initial NOF.

11. Organizational structure's plan and Information Technology Policy of the company.

Advantages of NBFC

· Largest source of ushering finance into the country.

· It can underwrite stocks and shares.

· It can do wealth management activities.

· It can provide loans and credit facilities.

· Easy recovery of the loan.

Disadvantages of NBFC

· It cannot accept demand deposits.

· It is having a stringent regulative mechanism.

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