Incorporating an NBFC in India: A Step-by-Step Guide

Incorporating an NBFC (Non-Banking Financial Company) in India can be a complex process, but it is an important step for anyone looking to start a financial business in the country. NBFCs play a vital role in providing financial services to individuals and businesses, and they are regulated by the Reserve Bank of India (RBI). In this post, we will provide a step-by-step guide on how to incorporate an NBFC in India, including the necessary documents and approvals required. By following these steps, you can ensure that your NBFC is legally registered and compliant with all relevant regulations.

  • Choose the type of NBFC: The first step in incorporating an NBFC in India is to decide on the type of NBFC you want to start. There are various types of NBFCs such as Asset Finance Company, Loan Company, Investment Company, and Infrastructure Finance Company.
  • Choose the name of the NBFC: After deciding on the type of NBFC, you need to choose a name for your company. The name should be unique and should not be similar to any other company’s name.
  • Obtain DIN and DSC: DIN (Director Identification Number) is a unique identification number assigned to directors of a company, and DSC (Digital Signature Certificate) is a digital signature required for online filing of documents with the Ministry of Corporate Affairs. Both DIN and DSC can be obtained from the Ministry of Corporate Affairs.
  • File the Memorandum and Articles of Association: The Memorandum and Articles of Association (MAA) are the governing documents of the company that contain all the rules and regulations of the company. The MAA should be filed with the Ministry of Corporate Affairs.
  • Obtain a Certificate of Incorporation: After filing the MAA, the Ministry of Corporate Affairs will issue a Certificate of Incorporation, which is a proof that the company has been legally registered.
  • Obtain a PAN and TAN: PAN (Permanent Account Number) is a unique identification number issued by the Income Tax Department, and TAN (Tax Deduction and Collection Account Number) is required for deducting tax at source and depositing it with the government. Both PAN and TAN can be obtained from the Income Tax Department.
  • Obtain a GST registration: If your company is involved in any business activities, you will need to obtain a GST (Goods and Services Tax) registration. This registration can be obtained from the GST Department.
  • Obtain a bank account: After incorporation, you will need to open a bank account for your company. This can be done by visiting any bank and filling out the necessary documents.
  • Obtain an RBI registration: After obtaining a bank account, you need to register with the Reserve Bank of India (RBI) as an NBFC. This can be done by filling out the necessary forms and submitting them to the RBI.
  • Obtain necessary licenses and approvals: Depending on the type of NBFC you are starting, you may need to obtain various licenses and approvals from the relevant authorities. This may include licenses from the Securities and Exchange Board of India (SEBI) or the Insurance Regulatory and Development Authority (IRDA).

In conclusion, incorporating an NBFC in India requires careful planning and compliance with various regulations. Following the steps outlined in this post, you can make sure that your NBFC is registered and ready to provide financial services to individuals and businesses. While the process can be complex, it is an important step in setting up a successful financial business in India. By obtaining the necessary licenses and approvals, you can ensure that your NBFC operates promptly and ethically.

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