Starting a Non-Banking Financial Company (NBFC) in India can be exciting but also challenging. NBFCs play a major role in India’s financial system, offering services like loans, asset management, and other financial activities, except for taking deposits from the public like traditional banks. However, getting an NBFC up and running requires compliance with several regulations and acquiring the right licenses. This is where an NBFC registration consultant becomes incredibly helpful.
This blog will explain how an NBFC registration consultant simplifies the complex licensing process for starting an NBFC. We will also talk about essential topics like the NBFC Account Aggregator License in India and the procedure for NBFC takeover.
What Is an NBFC Registration Consultant?
An NBFC registration consultant is a professional or a firm that specializes in helping businesses navigate the regulatory requirements for setting up an NBFC in India. These consultants offer guidance on how to apply for licenses, comply with RBI norms, and manage other paperwork involved in the process. By doing this, they reduce the time, stress, and risk involved in getting your NBFC licensed.
Why Do You Need an NBFC Registration Consultant?
Starting an NBFC requires a deep understanding of the Reserve Bank of India (RBI) guidelines and other legal requirements. While business owners may have expertise in finance and business management, they may not be familiar with the complex regulations governing NBFCs. Here’s why hiring an NBFC registration consultant is beneficial:
- Expert Knowledge: Consultants are familiar with the entire registration process, legal requirements, and RBI’s guidelines. They can ensure that the process is done right from the beginning.
- Saves Time: Completing the application, gathering required documents, and fulfilling compliance requirements can take time. A consultant can speed up the process.
- Reduces Errors: If mistakes occur in the registration process, it can lead to delays or even rejection of the application. A consultant ensures everything is in order to avoid such setbacks.
- Tailored Advice: Consultants can offer tailored advice on the type of NBFC license you need based on your business model. For instance, if you’re looking to operate as an Account Aggregator, the consultant will guide you specifically on the NBFC Account Aggregator License in India.
The Role of NBFC Registration Consultant in the Licensing Process
Let’s break down how an NBFC registration consultant simplifies the process of obtaining an NBFC license in India:
1. Initial Consultation and Business Evaluation
Before starting the registration process, a consultant will typically evaluate your business model to determine the right type of NBFC license you require. Whether you are looking to set up a lending-based NBFC or an account aggregator, the consultant will ensure that you meet all the criteria. During this phase, they will:
- Understand your business plan.
- Recommend the right type of NBFC for you.
- Explain the process, fees, and requirements.
2. Guidance on Eligibility Criteria
The consultant will ensure that your business meets the eligibility criteria set by the RBI. This includes:
- Minimum Capital Requirement: You need a minimum paid-up capital of ₹2 crores to start an NBFC. Consultants will help arrange this amount in compliance with the RBI’s requirements.
- Directors’ Experience: The promoters or directors should have relevant experience in finance. The consultant will guide you on this requirement and help you select the right personnel if necessary.
3. Document Preparation and Submission
The NBFC registration process involves submitting various documents to the RBI. Some of the essential documents include:
- Certified copies of the Certificate of Incorporation of the company.
- Details of the company’s directors and shareholders.
- Memorandum of Association (MOA) and Articles of Association (AOA).
- KYC details of promoters, directors, and shareholders.
- Financial projections and business plans.
- Banker’s report on the company’s financial health.
The consultant will ensure that these documents are prepared accurately and in the required format. They will also help with any additional paperwork that might be required during the application process.
4. Filing the Online Application
Once all documents are ready, the consultant will file the online application through the RBI’s COSMOS portal. They will ensure that the application is complete, error-free, and submitted on time. This step is crucial because incomplete or incorrect applications can delay the licensing process.
5. Liaison with RBI
Consultants act as a bridge between your company and the RBI. They will keep track of your application status and communicate with the RBI on your behalf if additional information or clarifications are needed. This ensures smooth communication and helps resolve any issues that might arise during the registration process.
6. Post-Registration Compliance
After receiving the NBFC license, the responsibilities do not end. Your NBFC will be subject to periodic compliance with the RBI’s regulations. An NBFC registration consultant can help your company remain compliant with the RBI’s rules, such as filing returns, maintaining financial ratios, and adhering to guidelines for asset classification and provisioning.
Understanding the NBFC Account Aggregator License in India
One of the recent developments in India’s financial sector is the rise of Account Aggregators (AAs). Account Aggregators are NBFCs that operate under the RBI’s guidelines to collect and share financial data of customers with their consent. This helps in creating a consolidated view of their financial information.
If your NBFC intends to operate as an Account Aggregator, you will need a specialized NBFC Account Aggregator License in India. The consultant will assist you in:
- Understanding the eligibility requirements for the Account Aggregator License.
- Preparing the application and submitting the necessary documents.
- Ensuring compliance with RBI’s data security and privacy guidelines.
The role of the consultant becomes crucial in helping you navigate the unique compliance requirements that come with this type of NBFC license.
Procedure of NBFC Takeover
In addition to helping with new NBFC registrations, consultants can also simplify the procedure of NBFC takeover. If you’re planning to acquire an existing NBFC, there are several steps involved, such as:
- Due Diligence: The consultant will help with conducting thorough due diligence to assess the financial health and compliance status of the target NBFC.
- Drafting Agreements: Consultants assist in drafting agreements between the buyer and seller of the NBFC, ensuring that all legal aspects are covered.
- RBI Approval: Any change in the ownership or control of an NBFC requires RBI approval. The consultant will help prepare the necessary documentation and guide you through the approval process.
- Post-Takeover Compliance: After the takeover is complete, your consultant will help you comply with post-acquisition requirements, such as reporting the change in management to the RBI.
This makes the entire NBFC takeover process easier and quicker, allowing you to focus on running your business.
Conclusion
Navigating the NBFC licensing process in India can be challenging due to the many regulations involved. An NBFC registration consultant plays an essential role in simplifying this process by guiding you through the requirements, preparing documents, and ensuring compliance with RBI guidelines. Whether you need an NBFC Account Aggregator License in India or are involved in the procedure of NBFC takeover, a consultant’s expertise can make a significant difference in ensuring that your business starts on a solid legal footing.
By hiring an experienced consultant, you can save time, avoid costly mistakes, and focus on growing your NBFC business efficiently.
Read more: Benefits of Compliance Management in NBFC