What is Nidhi Mutual Benefits Company?

What is a Nidhi Mutual Benefits Company?

A Nidhi mutual benefits company or a Nidhi company is an establishment that offers financial services but only to the members of the company. Nidhi Company Registration is a crucial aspect in the establishment. In this article, all the crucial aspects with regards to establishment of a Nidhi Company will be described to get a better understanding on the concept.

What are the features of Nidhi Company?

Nidhi company registration is the one of the most important decisions that a business owner makes. Thus, before applying for the registration, it is important to understand various elements or characteristics of Nidhi Company:

• The major feature of a Nidhi company is that it boosts and promotes small savings amongst the members of the company.
• Nidhi companies cannot offer high interest rates than the prescribed rate.
• There is an easy access to public funds
• It has the feature of a separate legal entity

What are the advantages of Nidhi Company?

Nidhi Company is considered by many individuals because of several benefits that it serves. The major advantages of a Nidhi company are as follows:

• It promotes small savings
• It charges a moderate amount of interest rate
• The loan processing duration is lesser than the duration it takes for a bank to process a loan.
• There is no involvement in the management of the company
• There is an easy access to public funds
• the members of the company enjoy limited liability

What is the registration process of Nidhi Company Registration?

In this section, the steps in the process for registration of a Nidhi Company will be mentioned.

• KYC of the Directors and Shareholders: For the establishment and incorporation of Nidhi Company, a minimum of 7 Members and 3 Directors are required. The directors and members can be the same individual in a Nidhi company.
• Obtain Digital Signature Certificate (DSC): Digital signature (DSC) is a mandatory requirement. DSC must be obtained by the directors as it helps in signing various forms digitally.
• Filing of SPICe+ form: This form is an important form that is filled for name reservation, DIN application and company incorporation. The company incorporation form can be filled through the SPICe plus form. The name of the Nidhi Company which will be decided by the owners must be unique.
• Final Incorporation Memorandum of Association (MOA) and Articles of Association (AOA) Drafting: Memorandum of Association and Articles of Association of the company are crucial documents that must be prepared and submitted by the individual. The MOA must mention all details of the company such as company name, objectives, aim, and proof of registered office of the Company which includes the total capital of the company, liability of the Members, Directors, Shareholders and the primary objective of the company
• PAN and TAN: The application form of PAN card and TAN must be filled along with the Nidhi Company Registration for incorporating Nidhi Company.

This article has been contributed by Mahiya Ahmed who is a content writer with SwaritAdvisors. SwaritAdvisors is an online portal that assists companies and startups with Trademark Registration, Company Registration, NBFC Registration, FSSAI Registration, Public Limited Company Registration, Copyright Registration, etc.

How to Start Nidhi Company in India?

India is a place of opportunity for every individual. The environment for Entrepreneurs is favorable. If you want to start your own business that can help you financially whenever required, You must register Nidhi Company in India. This type of business entity helps financially in a hard time. Nidhi Company Registration is an easy process even one can start nidhi company without having legal knowledge. Let's discuss what is nidhi company and how it works.

Nidhi Company Incorporation

What is a Nidhi Company?

Taking a gander at the significance of this, Companies Act, 2013, and Company Nidhi Rules, 2014 administers a sort of company which is known as a Nidhi Company.

A company that continues on the sole reason for making mindfulness among individuals with respect to investment funds. These organizations are controlled by the Ministry of Corporate Affairs (MCA) and the RBI is enabled to guide them every now and then in issues identified with their money related exercises.

These companies hold fast to the idea of investment funds by relating to common advantages for individuals. These organizations take stores from their individuals and loan to their individuals as they were. This forestalls any outsider interest in the undertakings of the company.

The Nidhi Company Registration Process is a straightforward and clear one and in this blog, we will be investigating Nidhi Company Registration.

Also, Read: Everything to know about Closing of a Nidhi Company

Conditions under which a Nidhi Company Registration should be possible.

There are a couple of conditions which should be satisfied with regard to setting up of a Nidhi Company. These are as per the following:

• At least 7 Members are required to enlist a Nidhi Company.
• A least of 3 Directors are required.

It will have a base settled up share capital of INR 5 lakh and it will have no inclination shares given.

Nidhi Company will not have any article in its Memorandum of Association other than the object of developing the propensity for frugality and investment funds among its individuals, getting stores from, and loaning to, its individuals just, for their shared advantage.

Each Nidhi Company will, inside a time of 1 year from the date of its joining, guarantee that it has At least 200 individuals.

The base Net Owned Fund (Paid Up Share Capital + Free Reserves) for such sort of a company ought to be INR 10 lakh or more and

The proportion of Net Owned Funds to Deposits ought to be 1:20 for example on the off chance that the net claimed reserves are INR 10 Lakh, at that point, your all-out store cutoff would be INR 2 Crore.

Unhampered term stores of at the very least 10%. of the remarkable stores as indicated

A Nidhi Company ought not to concede a Body Corporate, a Trust, or a Minor as a part. Its sole reason ought to be to serve people and their needs.

Last however not the least, the sole object of the company ought to be to get stores and loan it to its individuals for their shared advantages as it were.

Nidhi Company Registration Process

Procedure for Registration of Nidhi Company is fairly the same as that of some other sort of company.

We should investigate it.

Endorsement of the Name through 'RUN' office

Same as some other company, you got the opportunity to pick a name for your company. The candidate should search for an appropriate one in the MCA entry. For a Nidhi Company, the name ought to have "Nidhi Limited" as the final words as a piece of its name.

For instance, Seva Nidhi Limited.

Advanced Signature Certificate (DSC)

A Class 2 DSC must be gotten by the proposed Directors who may likewise be the Promoters or the Applicants of the Nidhi Company.

Recording of SPICE32 Form

After the endorsement of the name and the acquiring of the DSC, Form SPICE32 should be topped off with the accompanying connections.

Update of Association

Articles of Association

Container Card of the Subscribers

ID Proof of First Directors

Address Proof of First Directors

Address Proof of Registered Office (Rent Agreement/Sale Deed)

Most recent Utility Bill of Registered Office (Electricity/Telephone/Gas)

NOC from the Owner of Registered Office.

Assent and Declaration from the first Director in structure DIR-2

Self-Declaration from First Directors and Subscribers in structure INC-9

Endorsement and Certificate of Incorporation

After these procedures are done, it will generally take 15-20 days to get the fuse authentication of your Nidhi Company.

The Incorporation affirmation is proof that all the customs identified with the consolidation of the Nidhi Company has been finished.

Subsequently, in the event that you need your investment funds to meet some reason and furthermore make mindfulness among individuals with respect to reserve funds, at that point a Nidhi Company will positively fill its need.

More about Nidhi Company : The Ultimate Revelation of Nidhi Company Rules and Regulations

Fintech Based NBFC Collaboration: Types & Checklist

Understanding the meaning of Fintech

Fintech refers to the incorporation of technology into financial services. Many financial startups and financial companies make use of the latest technology as it serves various purposes such as reduction in operational and other costs. It also helps in the elimination and reduction of further complexities. Before entering the companies enter into an agreement, it is crucial to understand the purpose behind the collaboration. The major aim of NBFC Collaboration is to capitalize new technologies and partnerships with Fintech companies and financial institutions allows NBFCs to lower their costs and increases their customer base by lowering customer acquisition costs, servicing existing customers.

Elements of Financial Technology (Fintech) Companies

Some elements that are imperative to an organization and that contribute majorly in the Fintech companies will be discussed in this section.

What is the meaning of NBFC Collaboration?

The process in which NBFCs team up with Fintech based companies or startups and have a common objective is called NBFC Collaboration. Both the companies work together and achieve their common goals in this project which is established for a temporary time period.

What are the requirements for NBFC collaboration?

Certain compliance requirements are to be followed by NBFCs before entering into collaboration with the Fintech companies. In this section, we will discuss some important criteria that the NBFCs must follow and adhere to:

• Identity proof of the borrower is mandatory and must be submitted. Proofs such as Aadhar card, ID and PAN card will be accepted.
• A photograph of the borrower
• E-stamp duty on the loan agreements
• Certain CKYC norms must be followed by the companies
• All the other acts such as RBI act, GST and Companies act must be followed
• NPA provisions must also be followed

Technology requirements for Fintech companies

Fintech companies too need to follow certain requirements before entering into an agreement. NBFC Collaboration consist of various conditions that are to be followed by every NBFC and Fintech company:

• Every Fintech company must have a mobile application
• They must have a loan management system, collection system and loan origination system
• The Fintech companies must own credit and underwriting software
• All the Fintech companies must own IT security
• The borrower must have a borrowers profile verification
• Scrutinization of bank statement analysis and income statement
• Employment verification

Process of collaboration of NBFC and Fintech Companies

It is important to understand the process of NBFC and Fintech Company before starting the collaboration. In this section, we will discuss the process in detail:

• Selection of the right Fintech Partner
• Legal advisory with regards to affiliate
• Creation of loan application
• Management of compliances
• Designing of the FLDG structure
• Designing of revenue model
• Signing of Memorandum of Association and platform sharing agreement
• Creation of an ESCROW account
• Reconciliation and performance analysis

Read Also: Effects of COVID-19 on NBFC Sector in India

Types of Non-Banking Financial Companies (NBFCs)

The first step in the creation of NBFC and acquiring an NBFC license is to understand different type of NBFC and for that it is necessary to understand various categories NBFCs are categorized into. All of the below mentioned types require NBFC license before they start their business activities.

• Investment and credit company (NBFC ICC): The Reserve Bank of India decided to merge three categories of companies -Asset Finance Company, Investment Company and Loan Company were merged into one type of company which is known as Investment and Credit Company. An asset finance company refers to a company that lends burrowers a particular asset for a temporary duration. They are engaged in the business of financing physical assets with regards to economic activities such as machinery, equipment etc. An Investment Company is a company that is concerned and involves the business of acquisition of securities. A loan company is a company that has the primary business of providing finance in the form of loans and advances.
• Infrastructure Finance Company: An infrastructure finance company refers to a company that contains net owned funds of a minimum of 300 crores out of which a minimum of 75% of its total assets is used in infrastructure loans.
• Housing Finance Company: A company which involves activities such as providing finance for housing is called a housing finance company.
• Micro Finance Company: A micro finance company is also known as small finance bank, these institutions are established with the aim to provide banking services to the less privileged sections of society. Read also: Microfinace Company Registration.
• Mortgage Guarantee Companies: A company in which a minimum of 90% of the revenue is received from the mortgage guarantee company and the net owned fund are kept at Rs.100 crores is called a mortgage guarantee company.

If you want to know about NBFC so visit at: NBFC Registration.

Conclusion

Understanding the methodology, basic requirements in the NBFC Collaboration process is imperative and both the companies must recognize and follow all the steps so that the collaboration is completed in an effective manner.

A Easy Guide for Nidhi Company Registration

Nidhi company registration is regulated by the Companies Act, 2013. Nidhi companies are seen in relation to the nonbanking financial companies (NBFC) and the main objective of incorporating a Nidhi company is to encourage the saving habits and save those funds for the benefits of the members. In this article, we will discuss Nidhi Company Registration Complete Guide.

Nidhi companies basically save funds to promote the thriftiness and lend money to its members for their mutual benefit. Nidhi companies are prevalent now a day, as they do not require any approval from the RBI and Nidhi Company is relatively easier because it doesn’t require you to visit any Government office.

Swarit advisors are one of the companies in India who help clients to set up their own Nidhi companies. We have a team of young, exuberant and talented team of professionals who help a number of clients on daily basis. Whenever someone thinks about starting a Nidhi company, the first name that comes to their mind is Swarit advisors.

Swarit advisors is a reputable name in the market, our team has developed trust and faith in clients by delivering the projects on time. And these are our recurring clients who believe in the services we provide.

Further, we will discuss the Nidhi company registration complete guide and all the details related to it.

In this blog, we will try to cover the areas listed below and provide a glimpse of the requirements of the Nidhi company registration. Even if somebody is not looking for the incorporation of Nidhi Company, they could get some education regarding the Nidhi companies in India.

• Checklist for Nidhi company registration
• Documents required for the Nidhi company registration
• Benefits of Nidhi company registration
• Procedure for the registration of Nidhi companies
• Important forms to be filled for the registration of niche companies
• Things you must know

Checklist for Nidhi company registration:

Every type of company registration come with their own characteristics, if you are someone who is looking for the incorporation of Nidhi company then there are few attributes of Nidhi companies which one should know before taking the step of incorporating the Nidhi Company. So let’s take a look at the checklist for Nidhi company registration:

• Nidhi company registration is governed by the Companies Act, 2013 and Nidhi rules, 2014. It is regulated by the ministry of corporate affairs.
• Once you have registered a Nidhi company, it is directly controlled by the RBI. RBI is authorized to pass on the directions to the Nidhi Company, but there is no need to take any approval during the registration of the Nidhi company
• The basic agenda of any of the Nidhi companies in India is to accept a loan from its members and then lend it to its members or shareholders only when required
• There have to be at least 200 members on-board in the Nidhi Company within a year of starting the company. And you require at least 3 shareholders to start the Nidhi company, that needs a net owned funds of at least 10 lakh rupees and the ratio of net owned funds to deposits cannot be more than 1:20.
• Like other companies in India Nidhi Company also name their companies for the recognition. However, the word “Nidhi limited” is mandatory to add at the end of the company’s name. For example, if you have a nidhi company ABC then it must be suffixed as ABC Nidhi limited.
• It is noted that Tamil Nadu has the maximum number of Nidhi company registration in all over India. Tamil Nadu has 80% of the Nidhi companies in India.

Documents required for the Registration of Nidhi Company Registration

• Identity proof: For the identity proof of directors and the shareholders one has to submit the PAN card in case of Indians, passport in case of foreign nationals
• Address proof: During the registration of Nidhi Company you must submit the address proof of all the directors and shareholders, that include bank statements, electricity bills not older than two months.
• Aadhar proof: For all the directors and shareholders, aadhar card is a must.
• Office proof: When you start a Nidhi company, office space is required to run the Company. So, for the address proof of the registered office in India, you need to submit the documents such as electricity bill or property tax receipt or water bill. And rental agreement or an ownership document with a no objection certificate from the landlord.
• Photograph: For the registration of Nidhi Company, it is required to submit the passport size photographs of all the directors.

Also, Read: Compliances of Nidhi Company.

What are the benefits of Nidhi company registration?

Every form of organization has their own advantages, if you have registered a Nidhi company then there are several benefits that you can avail. Nidhi company registration has benefits such as separate legal entity, Easy management, uninterrupted existence, going concern, credibility.

We will discuss these benefits in detail.

• Individual legal entity: Nidhi companies are considered to be a legal entity and a juristic person. That brings a broader capacity to the Nidhi Company to own a property legally on its own name and can also sustain debts. And the members of the Nidhi Company are not liable to debts incurred by the company.
• Swift management: There is a board of management in a Nidhi company that controls all the activities of the company. So if you want to bring a change in the board of directors then you just need to fill the few forms with the registrar of companies. By filling these simple forms you can incorporate the changes required for the better growth of the company.
• Perpetual existence: A Nidhi company has uninterrupted existence that means it keeps on operating until it is legally dissolved. If any of the members leave the company or departs due to unfortunate death, the company keeps on existing no matter whatever the case is.
• Reliability: As Nidhi companies are registered with the Central Government and directed by the RBI develops a trust in the eyes of the clients. They are considered to have better credibility in comparison to the mutual benefit organizations.
• Ownership of property: Being a juristic person, Nidhi companies can own a property on its own name. And none of the members of the company can claim to the property owned by the company.

Above are all the benefits that are provided to the Nidhi companies.

Now, let’s take a look at the process of registering the Nidhi company registration.

What are the steps involved in the Nidhi company registration?

Now we will look at the steps that one needs to follow for the registration of Nidhi Company.

• STEP1: Digital signatures: The first step is to obtain the digital signatures (DSC) for all the directors of the company. Our team at swart advisors will make the digital signatures for you, as these signatures are required to sign the soft copies of the documents during the Nidhi company registration. Members must have DPIN as well which is issued by the Ministry of Corporate Affairs (MCA).
• STEP2: Name approval: The second step would be the approval of the name for the Nidhi Company, you look forward to starting. In this, you have to come up with a unique name that should not resemble any of the already existing names in the market. There is a Reserve Unique Name service (RUN) which one can use for the selection of a name for the Nidhi Company.
• STEP3: Filling SPICE form: Once you are done with the approval of the name, there is a SPICE form, in which you have to file the e-Memorandum of Association (MoA) and e-Articles of Association (AoA) need to be drafted with MCA. In addition to this, you need to provide the complete details of the directors of the Company in the SPICE form with the required documents.
• STEP4: Incorporation of Nidhi Company: It takes around a month for the Nidhi company registration process to be completed. Finally, you will receive the certificate of registration and company identity number.

List of additional forms to be filed for the Nidhi company registration

For the incorporation of any type of company or organization, one has to fill the list of forms to file the application of company registration. Similarly, there are certain forms which you must fill to get the certificate of registration of the Nidhi Company. You only have to fill two forms:

• INC 9
• DIR 2

1. FORM INC 9: All the subscribers in the company have to fill the form INC 9 and file it with the Memorandum of Association (MoA)
2. FORM DIR 2: All the subscribers must sign the declaration as per rule 5&6 of the Nidhi rules 2014 and it has to be filed by all the directors of the company.

Things you must know if you are looking for the Nidhi company Registration

We will try to discuss the points, often asked by our clients. The motive of mentioning the following points is to educate our readers so that they won’t commit the same mistakes, committed previously.

• One of our clients called us and asked if I start a Nidhi company, will I be able to finance microfinance businesses in India?

If you start your own Nidhi Company, then you won’t be able to finance the micro businesses in India; as the name financing, it says providing the credit facility to a business. Microfinance is only possible in case of large NBFCs famous in semi-urban and rural areas, which requires the approval of RBI.

• People always say, we know that Nidhi Company can accept and provide loans among its members but what is the amount, how much we can lend or accept?

Basically, the amount depends upon the kind of deposit Nidhi company has. There is a list of Amount deposit and loan limit.

Amount deposited	Limit of loan
Less than 2 crore	2,00,000; two lakhs
Between 2 crore-20 crore	7,50,000; seven lakh fifty thousand
Between 20 crore-50 crore	12,00,000; twelve lakhs
More than 50 crore	15,00,000; fifteen lakhs

According to the above table, Nidhi Company provides the loans to its shareholders.

• Is it possible to advertise the Nidhi company activities?

If you are thinking of promoting the activities of the Nidhi companies through advertisement then let us tell you, it is not allowed to advertise the activities of the Nidhi Company. As the Nidhi companies are made to encourage the habits of saving and promoting the thriftiness among the members.

Nidhi companies are also not allowed to offer money or gift anything for the growth in the deposits and lending.

• People ask, I have a nidhi company and doing very well. Can I open a branch to expand it?

Yes, you can open a branch of a Nidhi company. Once the Nidhi has met the conditions of earning a profit for the three consecutive years, you will be allowed to expand the company by opening three branches in the same district, your company is operating.

For further expansion, you need to take permission from the Regional Director.

• At last, let’s take a look at most asked question by our clients if they are operating a Nidhi company; can they provide unsecured loans?

As providing a loan to somebody is a question of involving a risk, therefore Nidhi companies are not allowed to issue the unsecured loan.  Nidhi companies can only issue secured loans to its members.

We hope that by now we are able to educate enough to get rid of most of the doubts regarding the Nidhi company registration. Swarit advisors are a well-known name in the market, clients have believed in what we do. It would have not been possible to reach the stage, where we are today.

After going through the above details, if you are thinking of starting your own Nidhi Company, then you just need to give us a call or contact swart advisors by filling our inquiry form. The moment we receive your inquiry, one of our team members will connect with you and discuss all the details regarding the kind of business you want to start.

Our team member will draft a plan according to your requirements and come with the best options available. He/she will guide you to select the best option where you can meet your company goals and flourish in future.

Your wait for a dream of having your own Nidhi Company is over; start advisors will make it all possible and make sure to fulfill all your needs regarding the company.

For more information do contact swaritadvisors.

Read, Also: Advantages & Process of Nidhi Company Registration.

Content Source: https://swaritadvisors.com/learning/nidhi-company-registration-complete-guide/

How to get FSSAI License in India?

Food Safety and Standards Authority of India is an autonomous regulatory body which oversees the functions of Food business. Any entrepreneur who wants to commence a business in Food industry must file an FSSAI Online Application to register itself. FSSAI monitors all the activities of Food business operator like food packaging, manufacturing, distribution or processing under strict guidelines of FSSAI Act, 2006. This write-up entails a complete knowledge regarding FSSAI License and its procedure.

Importance of FSSAI License to run Food Business

FSSAI License is a permit that affirms to the excellent quality of food in the business. A certified food business operator reaps several benefits that are often overlooked. Therefore, let’s dig into the crux of the matter and perceive all the benefits of FSSAI License:

• Create a positive image in the customer’s mind– The consumers are more vigilant about the quality of food they consume in today’s scenario. Therefore, having an FSSAI License can be extremely beneficial for the food operators as it helps them to gain more customer base.
• Legal support– Many food businesses consider FSSAI Online Application procedure as a daunting task; thus, they try to avoid it. However, a leading legal consultancy can ease the entire process. It is advisable to procure FSSAI License beforehand rather than bearing the repercussions later.
• Pathway to business expansion– It might seem that there is no need to register under FSSAI in the initial stage of food business when it is on a small scale. To enlarge a business at an extensive level, one must have FSSAI License which enables a food operator to establish his reputation across different areas. Moreover, it also makes it easier to access bank loans for business expansion.
• Use of FSSAI logo– Once FSSAI Online Application gets approved; you can utilize FSSAI logo in your restaurant menu to publicize the superior quality of your food. It also gives an edge to your business over other food operators who do not possess License. The logo is a symbolic of best quality food that matches up to FSSAI standards.

Source: https://swaritadvisors.com/learning/what-is-the-procedure-of-fssai-online-application-in-india/

What is the effect of Covid–19 on NBFC Sector?

Non-Banking Financial Company (NBFC) is a financial establishment that is formed by a group of individuals to fulfill the financial requirements of various people. They are registered under the companies act and have their rules and regulations which they must follow. One important aspect in the establishment of NBFC is obtaining NBFC Registration. Every business must obtain a license as per the guidelines mentioned.

Effect of Covid -19 on NBFC Sector

The current times of Covid – 19 has definitely had an unfavorable effect on the Indian economy and the NBFC sector has been hit by the pandemic too. The sectors that NBFCs benefits from the most are manufacturing, auto and retail businesses but since Covid-19 all the businesses are shut down with minimal to no business. Thus, NBFCs are incurring huge financial losses which is a matter of concern.

• Companies are not in a position financially to take up loan and advances
• Companies are unable to provide loan repayments to the NBFCs
• As a result of shortage of finance and MSMEs inability to sustain in the industry, NBFCs are struggling to retain their asset quality requirements.

Irrespective of the current situation, NBFCs are still a profitable business and if established as per the rules and regulations, they have the capability to contribute immensely to the Indian economy.

Before acquiring an NBFC license to be able to start several business activities, it is crucial to understand several features of Non-Banking Financial Companies (NBFCs),

• They are allowed to accept or renew public deposits for a minimum period of 12 months
• They are not allowed to accept deposits that is repayable on demand
• They are not allowed to charge interest rates that are higher than the ceiling rate which is prescribed by Reserve Bank of India (RBI)
• The main purpose of an NBFC is to acquire shares, stocks, bonds, debentures and securities from the Government.

Get more information about this via visit at- Effect of Covid-19 on NBFC Sector.

How NBFCs are playing a critical role in stimulating the growth of Indian Economy?

Non-Banking Financial Companies are emerging as the major contributors in the Indian economy after it was introduced. It has developed the country’s economy and made progressive contributions that lead to India’s development, especially in the banking sector. It has managed to modify the banking sector, acquire customers with different issues and solved them and impacted the country in a positive way.

Today, in this article, we will understand the concept behind the introduction of NBFCs and significant factors such as NBFC registration process, advantages, features, documents etc.

The Reserve Bank of India has the power to control the operations and govern the functions of non-banking financial companies, as per the provisions mentioned in the Reserve Bank of India (RBI) Act, 1934. It is registered under the Companies Act, 1956, some of NBFCs major business activities are acquisition of shares, stocks, bonds, debentures and offering loans and advances.

Defining Non-Banking Financial Companies

It is a financial institution established under Companies Act, 1956, engaged in the business of loans and advances and acquisition of shares, debentures, stocks, bonds and securities.

How are Non-Banking Financial Companies playing a critical role in stimulating the Indian economy?

• They contribute to the economy by lending to infrastructure projects
• NBFCs are established by taking into consideration individuals who require banking facilities but are not able to afford the banking services.
• NBFC gives priority to the customers and offer services as per their preferences.
• The objective of NBFCs is expansion and growth of industrial, commercial, institutional, and service sectors of the country.
• NBFCs can decide the rate of interest at which they will sanction loans.
• Deciding the interest rate gives them the flexibility to avail many benefits and charge short-term lending at a high rate of interest.
• Aids to increase capital stock of a company
• Provide assistance in the provision of long-term credit and specialized credit
• Helps in Employment Generation
• Help in development of Financial Markets
• Helps in reducing poverty by providing them help of various types

Types of Non – Banking Financial Companies

The NBFCs are categorized into various types as per different factors such as –

• Asset Finance Company
• Micro Finance Company
• Infrastructure Debt Company
• Loan Company
• Mortgage Guarantee Company
• Peer to Peer Lending
• Core Investment Company

Eligibility requirements for NBFC Registration

• The company must be registered under Section 3 of Companies Act.
• The company must hold a minimum amount of net owned funds (NOFs) of Rs. 2 crores.
• The company must own the funds and prove their ownership and they should not be burrowed.
• At least 1/3 of the Directors must have previous experience in the finance industry.
• A plan must be prepared in detail for the next five years and presented to the authority.

Registration Process of Non-Banking Financial Companies

• Company Registration: The Company must be registered as per the Companies Act 2013 or Companies Act 1956.
• Ownership of Net Owned Funds: A minimum Net Owned Funds (NOFs) must be held by the company. The amount must be Rs2 crore or more.
• Minimum requirement of Directors: There must be at least one director in the company.
• Maintain CIBIL Score: Maintaining a Good CIBIL score is essential as it is an important aspect that is considered and it fulfills the eligibility requirements to register as an NBFC.
• File the application form: The applicant must fill in the application form and submit it to the authority before the stipulated time.
• Submission of documents: The applicant has to prepare and submit documents required by the authority along with the application form. The documents submitted must be verifies and accurate.
• Obtain CARN Number: After the applicant submits the application form along with the documents, a CARN number will be provided to the applicant.
• Obtain NBFC License: Once the application form is approved and is considered satisfactory, the applicant obtains an NBFC license after which he can commence his business.

Documents required for Non-Banking Financial Companies

• Certified copy of certificate of commencement of business
• Certified copy of Incorporation of company
• Certified copy of Memorandum of Association
• Certified copy of Articles of Association
• Experience certificate of the directors of the company
• Board resolution approving the submission of application and authorizing signatory
• Board resolution which states that the company does not own any unregistered NBFC
• Financial statements of the previous two years
• Certified copies of fixed deposit receipt
• Self-attested copy of bank statement
• Business plan of the company

Conclusion

NBFCs emerged as a profitable business over the past few years and by helping individuals solve their financial needs, they contributed largely to the Indian economy. If they get to the roots of the problems they are currently facing and conduct an analysis of things that went wrong, possible improvements that could be implemented, they can regain their previous position in the Indian market.

Note: For more queries- visit at- Online NBFC Registration in India.