Loan from NBFCs

Loan from Banks & NBFCs

Loan from NBFCs

NBFC or Non-Banking Financial Company is a company, which is registered under Companies Act, 1956. The company mainly connects with the business of loans and advances, acquisition of shares, stocks, bonds, debentures, and securities issued by Government, local authority or other marketable securities that has similar nature of business as leasing, hire purchase or insurance.

A non-banking institution maintains the business of receiving deposits under any scheme in one lump sum amount or in installments based on the way of contribution or in another manner. Loan experts comment that it is noticed that banks have been reducing their exposure while NBFCs are increasing their exposure to the realty sector backed with the help of liquidity and interest rate environment. It is also worth able to mention that seasoning and tenure of loans, city and developer wise exposure increases risk of NBFCs loan in the comparison to banks.

Types of NBFC in India

By nature of the activity, they undertake, NBFCs can be categorized into the following:

  • Asset Finance Company
  • Investment Company
  • Loan Company
  • Infrastructure Finance Company
  • Core Investment Company
  • Micro Finance Company
  • Mortgage Guarantee Company
  • Housing Finance Company

By deposits they hold, NBFCs can be further classified into two categories:

  • Deposit accepting NBFCs
  • Non-Deposit accepting NBFCs

NBFCs can be further classified into following two categories - by size or minimum capital requirement for NBFC:

  • Systematically Important NBFCs
  • Non Deposit Holding NBFCs

Services Offered

  • Incorporation and Registration of NBFCs
  • Assisting is setting up the business – preparation of SOP, Credit Underwriting Mechanism etc.
  • Business Strategic Advisory
  • Product based Advisory
  • Legal, Regulatory, Accounting and Taxation Advisory
  • Company secretarial assistance
  • Structuring of financial instruments
  • Drafting of business documents
  • Entity Due Diligence
  • Training and Capacity Building

Documents required for NBFC Registration

Before filing your application for NBFC Registration:

  • Certified copy of Certificate of Incorporation issued by the registrar of companies
  • Extract of the main object clause in the MOA clearly depicting the financial business
  • The Audited balance sheet and Profit & Loss account along with directors & auditors report for the entire period of company's existence, or for last three years, whichever is less
  • Copy of the certificate of Director's highest educational and professional qualification
  • Copy of Director's experience certificate in the Financial Services Sector (including Banking Sector)
  • Bankers report depicting details of deposits and loans balances as on the date of application and the conduct of the account

Activities before getting registration from RBI:

  • Any NBFC activity
  • Accepting any public deposit