What is an NBFC?
Types of NBFC in India
NBFCs Which Need Not be Registered With RBI
Advantages of NBFC?
· Can provide loans and credit facilities
· Can trade in money market instruments
· Can do wealth management such as managing portfolios of stocks and shares
· Can underwrite stock and shares and other obligations
· NBFCs are the last resorts of borrowing; NBFCs are there where banks are not there
· NBFCs are the largest propellants of ushering finance into the country
· Agility is very important for NBFCs as it sets the banks apart. Banks function slower as compared to the NBFCs
· The use of modern methods by NBFCs has overcome key challenges that had overwhelmed conventional lending. NBFCS have made great use of technological advancements like the use of mobile phones and the internet which has helped in making information easily accessible anytime anywhere. It has reduced the demand and reliance on bank branches
· Technology is not only at the head of banking and financial services, but also an increasingly digitized India has underpinned the rise of NBFCs. Digitalization has given NBFCs the ability to present multiple choices and reach the larger audience at quicker pace. This indirectly gives rise to larger NBFCs
· Combination of partnership and database helps in increasing penetration of financial inclusion. To reach large numbers of customers successfully, and minimize risks, NBFCs have forged partnerships including the government to use their database and identify customer worthiness. Thus lending has been productive
Another major advantage of NBFCs is the ground level understanding of their customers profile and the need for their credit, which gives them an edge, as their ability to customize their products according to client needs
Disadvantages of NBFC:
- NBFCs cannot accept demand deposits as it falls within the realm of activity of commercial banks
- An NBFC is not a part of the payment and settlement system and as such an NBFC cannot issue cheques drawn on itself
- Deposit insurance facility is not available for NBFC depositors unlike in case of banks
- All NBFCs cannot accept deposits; only some can. Only those NBFCs holding a valid Certificate of Registration with authorisation to accept Public Deposits can accept/hold public deposits
- The regulatory mechanism for NBFCs is stringent
RBI has prescribed strict norms on capital adequacy and NPA in order to bridge the regulatory gaps between NBFCs and Banks, asking NBFCs to maintain minimum capital adequacy norms. It is reflected from a statement of the RBI which said that seven NBFCs were not able to meet the regulatory minimum capital adequacy norms of 15% as of March 2016.
Source : https://muds.co.in/pros-cons-nbfc-business-india/
Procedure to Incorporate an NBFC
How long does it take?
How does it works?
- Our expert will understand your requirements
- They will provide basic details and documents list required for registration
Make the Payment
- You make the initial fee payment through secure payment gateway towards stamp duty and out of pocket expenses.
Application for company registration
- Application for company name registration under SPICe+
- Procurement of Digital Signature Certificate (DSC)
- Documents drafting including MOA and AOA
- Application for Company registration
- Application PAN and TAN