Non-Banking Financial Companies (NBFCs) are proving to be revolutionaries for financial institutions in raising loans, credits, retirement planning, and investments. NBFCs are regulated in India by the Reserve Bank of India(RBI) under the Companies Act, 2013. Thus, it is important for the RBI to lay down specific guidelines and norms to help protect the interests of hopeful customers. If you’re already in the process of starting your company, Check out the Annual Compliance Checklist for NBFCs. In this article, we’re going to focus on RBI guidelines for NBFC companies and how they will affect your business in the future.
For a comprehensive introduction to NBFCs and how they function to check out the article on Introduction and Classification of NBFCs.
The functions of the NBFCs are regulated and controlled by the RBI under chapter III B of RBI Act,1934 and it registrations must follow guidelines laid down in Section 45-IA of the RBI Act, 1934. Under this act, the rules of registration of NBFCs are laid out. These indicate that for registration of NBFCs in India:
- The company must be registered as a Public Limited Company or Private Limited Company.
- The company should have a net-owned fund of Rs. 2 Crores.