Classification of non-bank financial companies in India

1. NBFC-Funding (NBFC-D)
2. NBFC-Non-Funding (NBFC-ND)-(NBFC-ND-SI)
RBI has appointed several committees to make recommendations on the size of the NBFC market in order to increase the market size of the NBFC in the financial sector. At the same time, the RBI also revised the guidelines for the regulatory framework of NBFCs from time to time.
Regulations
The RBI has revised its framework to curb risks in the financial system and provide freedom of operation for the size of the NBFC market.
Regulatory requirements
NBFCs have certain requirements, such as the Fair Practice Act (FPC) and anti-money laundering. The NBFC-ND category is not subject to any prudential guidelines and has full freedom to conduct its activities.
In addition, nbfc's market size is critical in the Indian economy as it can cover hard-to-reach areas. In the financial sector, it is considered a substitute for banks. In a comparison of banks, this is desirable because they have expertise in niche areas. It is the third largest banking sector in the Indian financial industry.

For a large and diverse country like India, securing financing channels for economic growth and entrepreneurship is essential. The rise of such specialized institutions and systems will certainly change the way the banking industry develops. This will pave the way for ensuring long-term sustainable growth of the NBFC. In addition, as more consumers adopt digital transaction models, the digital wave may open up new avenues for growth.
In the future, the emerging credit needs of emerging India will provide an opportunity for NBFC to bridge the gap, especially in industries where traditional banks are unwilling to provide services. It is estimated that more than 50% of micro, small and medium-sized enterprises have no access to formal credit. In addition, improving macroeconomic conditions, increasing credit penetration, increasing consumption and disruptive digital trends will bring huge opportunities for NBFC credit to grow at a strong rate of 7% -10% in the next few years.
Indian central bank issues new indicators for p2p lending platform
The Reserve Bank of India (RBI) has issued instructions for non-bank financial companies operating P2P lending platforms. According to the instructions, from now on, no NBFC can start or conduct P2P lending platform business without a registration certificate. Each company applying for registration with the bank in the form of NBFC-P2P must have a registered capital of no less than Rs. 20 million and no more than the amount prescribed by the bank. This is good news for existing nbc-p2ps, as there are very few players on the market. They are required to apply for registration in the form of NBFC-P2Ps within 3 months. These instructions issued by RBI will be identified as the 2017 non-bank financial company-P2P platform (Indian central bank) directive, and will take effect immediately.
NBFC-P2P activity scope:
Among other things, NBFC-P2P can:
(i) As an intermediary, provide an online market or platform for participants participating in P2P lending.
(ii) Failure to raise deposits in accordance with or in accordance with section 45I (bb) of the Act or the Indian Companies Act 2013.
(iii) Do not lend on your own.
(iv) does not retain balance sheets, does not retain funds provided by loan lenders, and does not retain loans provided by loan lenders;
(v) No cross-selling products, except for loan-specific insurance products.
(vi) No international financial flows are allowed.
What NBFC-P2P needs to fulfill:
(1) Conduct due diligence on participants.
(2) Credit assessment and risk analysis of borrowers and disclosure to potential lenders
(3) Provide loan agreement documents and other relevant documents.
(4) Provide corresponding assistance in the payment and repayment of loan amounts.
(5) Provide platform loan recovery services.
Prudence
(1) The total risk exposure of the loan issuer to all borrowers at all times shall be subject to a limit of Rs 100 trillion across all P2Ps.
(2) The total amount of loans obtained by the borrower in all p2p loans at any time shall be capped at Rs 1 million.
(3) All p2p exposures of a single lender to the same borrower must not exceed Rs 50,000.
(4) The term of the loan must not exceed 36 months
(5) Funds transfer between participants of the P2P lending platform will be carried out through the escrow account mechanism. All fund transfers must be made through a bank account. Cash transactions are strictly prohibited.
India's P2P loan industry is currently valued at $ 40 million and is expected to grow to about $ 4-5 billion by 2021. With the rapid development of the Internet, mobile technology and public awareness, these will be some powerful driving factors that help P2P spread its footprint. Crowdfunding, micro-loans, social loans, short-term payday loans and other forms of loans are being accepted and are gradually being welcomed. The report shows that retail loans (personal loans) will increase five-fold in the next 10 years, from US $ 620 billion to US $ 302 billion in 2026-27. This will open up a huge space for alternative borrowing, and P2P will become a hit!
Market size

Credit allocation

NBFC registration procedure
Step 1: For NBFC Registration, it requires a minimum registered capital of Rs 20 million.
Step 2: Then open a bank account and deposit all 20 million rupees into the bank deposit account without lien.
Step 3: Do you apply for registration certificate online from RBI, and then submit documents to RBI regional office,
Step 4: RBI will grant a certificate after going through all the procedures.
Request 1: List of Documents (Submit RBI)
1. Company registration certificate (certified copy issued by ROC)
2. Excerpts from the main object clauses in MOA (clearly delineating financial business)
3.The resolution committee stated the following before registering with the Reserve Bank of India:
4. Compliance with the "Fair Code of Conduct" (as guided by RBI)
5. No NBFC activities
6. Do not accept any public deposits
7. Audited balance sheet, income statement and reports of directors and auditors (the entire period of the company's existence or the past 3 years, whichever is less)
8. Director's highest education and professional qualifications (copy of certificate)
9. Sensible experience in financial services (including banking) (copy of certificate)
10. Details of deposits and loan balances (bank report)
Requirement 2: prerequisites for RBI registration
1. A company should be registered under the Companies Act 2013 or the Companies Act 1956
2. The company should have a minimum registered capital of Rs 20 crore
The following case Faircent is the first P2P lending platform in India to obtain the NBFC-P2P registration certificate of the Reserve Bank of India (RBI). The platform currently has more than 40,000 registered lenders and 350,000 registered borrowers, with a cumulative loan of more than 6,000.

Source: Nidhi Company Registration