There are many different types of financial institutions in our country of which one must get the NBFC license from RBI. For defining a company as a non-banking financial company the Reserve Bank of India mentions, financial activity as the principal business. So, what is the need for a non-banking financial company ICC which is also called an investment and credit company? Re-categorization is being done to provide non-banking financial companies with greater operational flexibility based on the activity rather than the entity. So what has been done here is the non-banking financial company earlier called asset finance company, loan companies, and the investment companies; these three are merged and grated a category called non-banking financial company investment and credit company (NBFC-ICC). This can be defined as any company which can be carrying any financial institution on a principal business if the principal business is of asset finance providing of the finance whether by making loans or advance or otherwise for any activity other than its own and the acquisition of securities and it is not any other category of the non-banking financial company as defined by the Reserve Bank of India in any of its master directions. These non-banking financial companies are into loans and investments.
The most popular NBFC online registrations that can be applied for are asset finance companies, investment companies, loan companies, infrastructure finance companies, infrastructure debt fund non-banking financial companies, microfinance institutions, non-banking financial factors.
This harmonization of the categories of non-banking financial companies is a part of the effort which has been done by the committees to harmonize the Reserve Bank of India companies of the non-banking financial company sectors which are largely been regulated entity-wise rather than business-wise. The principal business is nothing but, a company’s financial assets constitute more than fifty percent of the total assets, and income from financial assets constitutes more than fifty percent of the gross income. So any companies which have these two conditions are called non-banking financial companies.
How to get prepared before applying for a non-banking financial company license with the reserve bank of India?
If the non-banking financial company registration is regarding the profile of directors and shareholders although there are no prescribed requirement qualifications of directors and shareholders, it is expected that the board of the company shall be financially literate and capable of carrying out the banking operations. Regarding the shareholders, the quality of capital shall be fair and in good means, overall there should not be any integrity issues or criminal matters against any of the parties of the proposed end. A business plan is a detailed structure defining all the components right the proposed non-banking financial companies; let it be a loan process, loan types, capital structure, research, and everything that should be well-defined in a business plan. A strong business plan is the lifeline of the non-banking financial company application and it holds the strength to get the license. Most professionals are well equipped with the resources to develop an efficient and versatile business plan based on the inputs of the applicant.
Lastly, it is about the documentation. A complete checklist of the documents required for non-banking financial company registration is not available everywhere. It is a detailed work that is to be executed in an efficient manner. The document shall be true and latest and shall be free from all the defects. For getting prepared for the documents one shall look for any material or other defect shall get the same fixed well in time. It is to be noted that every document submitted with the Reserve Bank of India along with the application goes through vigorous scrutiny by the Reserve Bank of India and any deficiency on the documentation part may lead to the rejection of the application. Moreover, it is to be kept in mind that no valuable information that holds vital importance in the process of getting the non-banking financial company registration shall be kept discreet. The lack of proper banking channels and shortage of basic banking amenities in many areas of the country have given immense opportunity to the non-banking financial companies in making their strong feet in the banking sector and non-banking financial company sector is said to expand further in the upcoming years if someone is looking for the fastest loan approval and non-banking financial company would be the first to preference due to the stringent processes followed by the banks.
Conclusion
NBFCs do almost everything that the banks do. The non-banking financial company provides loans and it will accept the deposits. These companies can be profitable because of the limited reach of banks in rural and urban areas in India. There are lots of advantages of non-banking financial companies for promoters. These companies provide short-term lending, no capital invests and higher return on investment.