A non-banking financial company (NBFC) is a company registered under the rules and regulations of New Companies Act, 2013 and is engaged in the business of loans and advances acquisition of shares/stock/bonds/debentures/securities issued by government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business, but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale/purchase/construction of immovable property.
NBFC needs registration number from reserve bank to carry on the financial business. After receiving the registration number, Non banking financial company is able to carry on their business of financial nature in India and around the world. The total number of Non-Banking Financial Companies should be registered with RBI.
The New Companies Act, 2013 sets down the rules and regulations to incorporate a company in India and desirous of commencing business of non-banking financial institution as defined under Section 45 I(a) of the RBI Act, 1934 should have a minimum net owned fund of Rs 25 lakh (raised to Rs 2 crore from April 21, 1999). NBFC requirements are very important to be complied with and documents to be submitted to RBI by NBFCs for obtaining certificate and Registration from RBI.
The company is needed to submit its application for registration in the prescribed format along with necessary documents for bank's consideration. The bank issues certificate of NBFC registration after satisfying itself that the conditions as enumerated in Section 45-IA of the RBI Act, 1934 are satisfied.