Overview of NBFC Registration in Puducherry

NBFC stands for Non-Banking Financial Company. These are companies that get involved in financial acts like money lending, providing different loans, making investments, economic data and other business goals mentioned in the Companies Act 2013 and Section 45-IA in the RBI Act 1934. NBFCs do not hold a complete banking license even if they get engaged in multiple financial actions. If a company wants to make investments in businesses or start lending to them, then first, they must get a certificate from RBI which is called a Certificate of Registration (COR). The NBFC Regulations have been simplified by the RBI, thus making this process of acquiring a license easier.

Among the key services of the NBFC business, funding through loan, gold properties loan, asset finance, currency exchange, insurance, bonds, etc will come. But always keep in mind that this list of services related to NBFC is not an exhaustive list of services. There are many more important services which have been provided by them. RBI had made two important departments which look after their work. The name of these two departments are department of non banking regulation and department of non-banking supervision. 

Some of the Key Roles and Functions of NBFC in Puducherry

The duties of NBFCs which got registration by RBI in India are discussed below in detail:

• NBFCs can play a major role in the development of infrastructure.
• They assist in the formation of capital or capital formation.
• Substantial rise in the employment of people after the development of the NBFCs.
• Providing financial support to economically disadvantaged groups.
• Encourages the growth of the Indian economy.
• NBFCs provide financial advice and long-term reports.
• Encourages the growth of the financial market of the country.

What are the Key Advantages of NBFC Registration in Puducherry?

The following are the benefits of NBFC Registration in India:

• Saves Both Time and Money

When it comes to opening a bank, even a smaller one, it takes a lot of approvals and time. On the other hand, NBFC Registration is a simple process which can be done through an experienced professional easily. Only thing which you need to be concerned about is to hire a good and trustable professional who has experience in a similar field. This will make your work half done.

• Repayment of Loans is Systematic and Simple

The process of repayment of loans in a non banking financial company is very simple and systematic. This helps the customers to pay the amount of loan smoothly with convenience. This system of repayment of loan is not as smooth as Non-Banking Financial Companies in a bank. Hence if you are thinking about opening an NBFC instead of investing in a bank you are on the right path and you can make decisions related to the same.

• Promotes Economic Development

NBFCs provide loans to the small and medium enterprises and MSME also the start-ups registered under the start-up India scheme. They are the supporting system of the Indian economy. If these small and medium enterprises grow and develop they ultimately result in the development of the Indian economy. By providing easy and safe loans to such companies NBFCs are helping in the development of the Indian economy.

Payment and Settlement System of 2008 Relevancy with NBFCs in Puducherry

The same covers all aspects, like the application for approval to start a payment system, the issuance of such approval, payment instructions, payment standards to be maintained in the payment system, timely submission of paperwork and financial information, and so on.

In 2008, the relevance of charge and agreement systems for Non-Banking financial companies (NBFCs) became important due to regulatory changes aiming to strengthen economic pathways internationally, like in India. The entities were efficiently critical for coping with financial difficulties, ensuring operational efficiency, integrating with the banking system, and adapting to technological improvements, all of which have been critical for NBFCs to maintain smooth operations and compliance.

What Distinguishes an NBFC from a Bank in Puducherry?

Both NBFCs and banks are engaged in financial acts but still, they are different from each other in the following ways:

• Regulatory Acts: Banks are controlled by the Banking Regulations Act 1949 on the other hand NBFC works under the Indian Companies Act 2013.
• Accepting Deposits: Banks take deposits from their customers, on the other hand NBFCs do not.
• Drawing cheques: Banks can issue and draw cheques, on the other side NBFCs cannot.
• Facility of Depositing Insurance: Bankers have access to deposit insurance, on the other hand non-banking financial institutions do not.

What are the Different Types of NBFCs in Puducherry?

Non-banking financial institutions are classified according to their activity and liabilities. Some of the common types of NBFCs are discussed below:

On the Basis of Activities

• ICC or Investment Credit Company
• Microfinance Institutions
• NBFC Factors
• Peer to Peer Lending
• Account Aggregator NBFC
• IFC or Infrastructure Finance Company
• CIC or Core Investment Company

On the Basis of Liabilities

• Deposits Accepting NBFC
• Non-Deposit NBFC

Non-Banking Financial Company Registration Prerequisites in Puducherry

To be recognized as an NBFC, the key conditions need to be met, consistent with Section 45-IA of the RBI Act 1934 are:

• Registration of business entities under the company law either 1956 or 2013
• Prior experience in the finance of the director (1/3rd of the director’s experience) for getting
• NBFC license
• Draft of a detailed five year business plan by the applicant company
• Net-owned fund need
• Qualification of capital evaluation
• Good credit score
• Capital’s quality
• Requirements under FEMA

Documents Required for NBFC Registration in Puducherry

The documents needed for NBFC Registration in India are discussed below in detail:

• Incorporation Certificate of the company
• Certificate of Memorandum of Association (MoA)
• Net worth of Shareholders and Directors
• Article of Association (AoA)
• Educational background of Shareholders and Directors
• Certificate of Experience
• Corporate Overview
• Credit Information
• KYC details
• Bank Account details
• Information about Income Tax Return
• Annual audit report must be created through a sheet
• Report from Bankers
• Resolution of Boards
• Business plans
• IT Policies

What is the Process for Registering an NBFC in Puducherry?

The key steps of the registration process ought to be followed for NBFC Registration in India:

• Step one is to hire a NBFC Registration consultant who has a prior experience of ten years (at least) including a team of professionals which includes senior bankers, CSs, lawyers and chartered accountants.
• The following must be included in the name of the proposed firm- Leasing, Investment, Finance, Fintech, FinServ or Capital.
• A public corporation or a private limited company has to be created.
• Making lists of operational area, city and registered office.
• The Incorporation Certificate has to be obtained from the Registrar of Companies.
• Depositing net owned funds into the bank a/c of the company.
• All the paperwork needed for NBFC Registration has to be collected.
• The company's business plan for the next five years must include an executive summary, product plan, money lending model, subject risk model, peer analysis, SWOT analysis, financial projections, and so on.
• Applying for RBI registration under the RBI Act 1934.
• The applicant company must submit an online application to the RBI through its official website.
• The application will be given CARN or a reference number which will help in future references and inquiries.
• The next step is to submit the duplicate hard copies at the concerned regional office of RBI.
• The documents submitted at the office must be checked carefully before submission.
• The application is forwarded by the regional office to the central office.
• After receiving the Certificate of Registration, the business must be started by NBFC within six months of receiving it.

Key RBI Requirements in order to Register NBFC in Puducherry

Some of the key Reserve Bank of India’s requirements in order to register NBFC in India are given or discussed below:

• Minimum Net Owned Funds: Maintain capital levels according on NBFC type.
• Company Structure: Register as a company under the Companies Act of 2013 with a financial services focus.
• Fit and Proper Directors: Ensure that directors fulfill the RBI's integrity and competency standards.
• Business Plan: Provide a detailed plan that includes actions, funding sources, and financial estimates.
• Board Composition: Adhere to RBI board structure related guidelines, which include independent directors.
• Capital Adequacy Ratio: Maintain a minimum capital adequacy ratio (CAR) in accordance with RBI requirements.
• KYC/AML Compliance: Establish stringent Know Your Customer (KYC) and Anti-Money Laundering rules.
• Credit Rating (if applicable): Request a credit rating, especially for deposit-taking NBFCs.
• Infrastructure: Have sufficient office space, staff, and operational systems.
• Regulatory Reporting: Meet RBI's reporting requirements, including financial statements and asset-liability management reports.

Instances when RBI can Cancel the Registration of NBFCs in Puducherry

There are certain circumstances in which RBI can cancel the registration of non banking financial companies and such conditions are given below:

• Non-Compliance: Persistent failure to adhere to RBI regulations.
• Financial Viability: Severe financial instability or failure to maintain needed capital sufficiency.
• Misconduct: Involvement in fraud, misleading practices, or serious misconduct.
• Non-Operational: Extended period of non-operation without valid reasons.
• Public Interest: Actions detrimental to depositor or financial system interests.
• Fit and Proper Criteria: Directors not meeting RBI's integrity and competence standards.
• Infrastructure: Inadequate operational setup.
• Voluntary Request: NBFCs own request for registration cancellation.
• Legal/Regulatory Violations: Breach of statutory or regulatory provisions.
• Systemic Risk: Poses risk to systemic stability or market confidence.

Penalty Provisions-In Against Non-compliance with RBI Regulations in Puducherry

When there is non-compliance with RBI Regulations, the penal provisions are as follows:

• If an NBFC business is conducted without an RBI Registration Certificate, it will face 1 to 5 years in prison and a fine of Rs. 1 to 5 lakhs.
• Non-compliance with RBI guidelines can result in imprisonment for up to three years.
• If a party fails to reply to questions or submit evidence, they may face a fine of up to Rs. 2000 per offense, and with that up to Rs. 100 every day beginning on the first day of violation.
• When deposits are accepted, a fine of twice the amount of money received along with three years of imprisonment is charged.

Why to Choose Whizseed for NBFC Registration in Puducherry?

Some of the key reasons due to which you should choose Whizseed for the registration of NBFC in India are:

• Expertise: Specializes in NBFC registration with deep knowledge of RBI regulations.
• Custom Solutions: Tailors services to fit your business needs for efficiency and compliance.
• Timely Service: Known for efficiency of registration processes to avoid delays.
• End-to-End Support: Guides through consultation, documentation, submission, and follow-ups.
• Compliance Management: Ensures adherence to all RBI requirements for regulatory compliance.
• Cost-Effectiveness: Offers competitive pricing without compromising service quality.
• Reputation: Trusted for reliability, professionalism, and integrity in the industry.
• Post-Registration Assistance: Provides ongoing support and advice for operational and growth needs.