Non – Banking Financial Company
A Non-Banking Financial Company, also known as NBFC are financial institutions that provide banking facilities to individuals at reasonable rates. A Core investment company is a major type of NBFC. Registration of a company is mandatory and is the first step before undertaking business activities. Core investment company registration must be undertaken before starting it business activities.
Documents required to establish NBFC License
- Certified copies of Certificate of commencement of business and certificate of incorporation of company
- Copies of PAN/CIN in the name of the company
- Experience certificate of the directors who are a part of the NBFC
- CIBIL data that concerns the directors of the company
- Certified copy of the Board resolution for the presentation of ‘Fair Practices Code’
- Board resolution stating all the necessary details
- Financial statements of the past two years of the unincorporated bodies
- Authorized share capital and latest shareholding pattern of the company
- Self- attested bank statement / income tax returns
NBFC Registration Process
The process of NBFC license is providing for any individuals to start a loan or investment business in India.
- Company Registration according to the act
- Possession of net owned funds
- Number of directors
- Maintain CIBIL score
- Filing of application form
- Submission of essential documents
- Acquiring CARN Number
- Submission of the application form
- Arrival of NBFC License
Types of Non –Banking Financial Process
The various types in which they are categorized into are as follows –
- Asset finance company
- Loan Company
- Mortgage Guarantee Company
- Investment Company
- Core Investment company
- Infrastructure finance company
- Micro finance company
- Housing finance company
Advantages of Non – Banking Financial Companies (NBFC)
They contributed in the growth and expansion of the country
- Contributed in the expansion of employment opportunities
- Provided several banking facilities to individuals that are unable to afford facilities of a bank
- Offers benefits to individuals with a low credit score
- Facilitates wealth creation
- Fulfill financial requirements of Micro, Small and Medium Enterprises (MSME)
Defining Core Investment Company
A core investment company, also known as a CIC, is a non-banking financial company which undertakes the business of acquisition of shares and securities and holds not less than 90 per cent of its net assets in the form of investment in equity shares, preference shares, bonds, debentures, debt or loans in group companies.
Features of Core Investment Company
- Core investment companies are specialized non-banking financial companies.
- A core investment company registered with the RBI (Reserved Bank of India) has an asset size of above Rs 100 crore.
- The major business of a core investment company is acquisition of shares and securities but it has certain conditions. One of the conditions is that it should not hold less than 90% of the total net assets in the form of investment in equity shares, preference shares, bonds, debentures, debt or loans in group companies.
- Every group that has a core investment company must have a Group Risk Management Committee.
- The total number of subsidiaries of CICs in a group must be restricted to two. A company is not permitted to make investments through more than a total of two subsidiaries of CICs which includes its own group.
Step down CIC
A step down CIC is the subsidiary company of a company which is a subsidiary of a company. Step down CICs are not permitted to invest in other CIC.
- Minimum Requirements to establish Core Investment Company
- Certain requirements must be filled before the establishment of a core investment company –
- At least 90% of its total assets should be in the form of investment of the any type such as equity shares, preference shares, debentures, debts or loans.
- At least 60% of its net assets should be in the form of investment in the equity shares as per the last audited balance sheet.
Core Investment Company Registration Process
If a company wants to get registered as a core investment company, it must have a threshold of Rs 100 crores asset size and it must also have access to public funds for core investment company registration.
Steps involved for a successful Core Investment Company (CIC) registration are as follows –
- File in and submit the application form
- The application must then be filled and submitted to the Department of Non-Banking Supervision (DNBS)
Do core investment companies accept public deposits
Yes, they accept deposits or funds from the public.
Conclusion
Core investment companies are establishments that offer many benefits to individuals which is the reason why they are considered by several individuals.
