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Non Banking Finance Company (NBFC) (MCA Registration)

About of Service

NBFCs (Non-Banking Financial Companies) in India are financial institutions that provide banking services without meeting the legal definition of a bank. These companies engage in various financial activities such as loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business, etc.

MCA (Ministry of Corporate Affairs) registration is a crucial step for any company intending to operate legally in India. However, for NBFCs, MCA registration is just one part of the overall registration process. Here's a breakdown of the NBFC registration process and the role of MCA within it:

Company Incorporation: The first step towards establishing an NBFC is to incorporate a company under the Companies Act, 2013. This involves registering the company with the Registrar of Companies (ROC) under the jurisdiction where the company's registered office is situated.

Memorandum and Articles of Association: The company must draft its Memorandum of Association (MOA) and Articles of Association (AOA) according to the guidelines provided by the Companies Act. These documents outline the company's objectives, structure, and internal governance rules.

MCA Registration: Once the MOA and AOA are prepared, the company files an application for incorporation with the MCA. This involves submitting various documents, including the MOA, AOA, identity proofs of directors, address proofs, etc. Upon verification and approval, the MCA issues a Certificate of Incorporation, signifying the legal existence of the company.

Other Regulatory Approvals: In addition to MCA registration, NBFCs are required to obtain a Certificate of Registration (CoR) from the Reserve Bank of India (RBI) to commence operations. The RBI regulates NBFCs and imposes specific eligibility criteria and regulatory guidelines for registration.

Post-Incorporation Compliance: After obtaining MCA registration and RBI's CoR, NBFCs must comply with various regulatory requirements, such as maintaining prescribed capital adequacy ratios, submitting periodic reports to RBI, adhering to fair practices code, etc.

While MCA registration is necessary for NBFCs to establish their legal identity as a company, RBI registration is indispensable for conducting financial activities as an NBFC. Therefore, aspiring NBFCs must fulfill both MCA and RBI requirements to operate legally and efficiently in the Indian financial market. Consulting legal and financial experts familiar with NBFC regulations can help streamline the registration process and ensure compliance with all applicable laws.

Uses and Benefits
  • Company Incorporation: This involves registering the NBFC as a company under the Companies Act, 2013, or any relevant legislation in force.
  • Memorandum and Articles of Association: Drafting and filing of the Memorandum of Association (MOA) and Articles of Association (AOA) with the MCA.
  • Director Identification Number (DIN): Obtaining DIN for directors of the NBFC, which is a unique identification number required for individuals serving as directors of Indian companies.
  • Digital Signature Certificate (DSC): Obtaining digital signature certificates for directors or authorized signatories, which are required for online filings with the MCA.
  • ROC Compliance: Regular filing of various forms and documents with the Registrar of Companies (ROC) as per the provisions of the Companies Act, such as annual returns, financial statements, etc.

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Additional Disclosure

  1. Company Details:

    • Provide the legal name of the NBFC as registered with the Registrar of Companies (RoC).
    • Mention the Corporate Identity Number (CIN) issued by the RoC upon incorporation.

  2. Objectives and Activities:

    • Clearly outline the primary business activities and objectives of the NBFC as per its Memorandum of Association (MoA).
    • Specify the types of financial services the NBFC intends to provide, such as lending, investment, leasing, etc.

  3. Shareholding Pattern:

    • Disclose the shareholding pattern of the NBFC, indicating the ownership structure among shareholders.
    • Provide details of any changes in shareholding or transfers of shares since incorporation.

  4. Board of Directors and Management:

    • List the names and backgrounds of the directors appointed to the board of the NBFC.
    • Detail their qualifications, experience, and roles within the company.

  5. Corporate Governance Practices:

    • Describe the corporate governance framework adopted by the NBFC, including board committees and their functions (audit committee, risk management committee, etc.).
    • Highlight adherence to corporate governance guidelines and codes of conduct.

  6. Financial Statements and Audit Reports:

    • Present the audited financial statements of the NBFC, including the balance sheet, profit and loss statement, and cash flow statement.
    • Ensure compliance with accounting standards and disclosure requirements.

  7. Compliance with Regulatory Requirements:

    • Demonstrate compliance with the regulatory requirements of the Reserve Bank of India (RBI) and other relevant authorities governing NBFC operations.
    • Provide details of any inspections, audits, or compliance assessments conducted by regulatory bodies.

Terms & Conditions

Documents & Detail Required

  • Memorandum of Association (MOA): This document outlines the company's objectives, the scope of its operations, and its relationship with shareholders and stakeholders.

  • Articles of Association (AOA): AOA contains rules and regulations for the management of the company's internal affairs and the conduct of its business.

  • Identity Proof of Directors: Identity proof such as Aadhar Card, Passport, Voter ID, or Driver's License of all directors of the company.

  • Address Proof of Directors: Address proof such as Aadhar Card, Passport, Voter ID, or Driver's License showing the current residential address of all directors.

  • Proof of Registered Office Address: Documents such as rent agreement, lease deed, or sale deed along with utility bills (electricity bill, water bill, etc.) or property tax receipt not older than two months to prove the registered office address.

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FAQ'S

What is an NBFC?

An NBFC, or Non-Banking Financial Company, is a financial institution that provides banking services without meeting the legal definition of a bank. They engage in activities such as loans, investments, asset finance, etc.

Why is MCA registration necessary for an NBFC?

MCA registration is a mandatory step for incorporating any company in India, including NBFCs. It provides legal recognition and establishes the company's identity as a corporate entity.

What are the key documents required for MCA registration of an NBFC?

The key documents required typically include the Memorandum of Association (MOA), Articles of Association (AOA), identity and address proofs of directors, proof of registered office address, Director Identification Number (DIN) of directors, and Digital Signature Certificate (DSC) of directors.

How long does the MCA registration process for an NBFC take?

The timeline for MCA registration can vary depending on various factors such as the completeness of documents submitted, government processing time, and any additional scrutiny required. Generally, it takes a few weeks to a couple of months to complete the registration process.

Is RBI registration also required for an NBFC?

Yes, apart from MCA registration, an NBFC needs to obtain a Certificate of Registration (CoR) from the Reserve Bank of India (RBI) to commence operations. RBI regulates NBFCs and imposes specific eligibility criteria and regulatory guidelines for registration.