Overview
Eligibility
Process
Required Document
Benifit
Common Mistake

Overview

An NBFC, short for Non-Banking Financial Company, is incorporated under the Companies Act and primarily engages in lending, asset financing, and investing in various financial instruments such as shares and debentures. Additionally, it offers working capital loans and credit facilities. While ensuring adherence to fundamental regulatory requirements, the RBI has been streamlining the operations of NBFCs. Smaller NBFCs have experienced regulatory relaxation, while larger ones are subject to ongoing monitoring and enhancement efforts to align them with global standards.

Eligibility

The Reserve Bank of India (RBI) plays a crucial role in overseeing changes in control of NBFCs. Any change in shareholding that results in an acquisition of 26% or more of the paid-up equity capital requires prior approval from the RBI. Similarly, any significant change in the management of an NBFC, such as the appointment of new directors or key managerial personnel, must also be reported to the RBI.

Process

PROCESS

Performing a comprehensive due diligence assessment to evaluate the financial, legal, and regulatory facets of the targeted NBFC.
Securing essential regulatory authorizations from the Reserve Bank of India (RBI) and pertinent regulatory bodies.
Executing a share purchase agreement or alternative acquisition agreements with the targeted NBFC.
Issuing requisite disclosures to the stock exchanges, shareholders, and additional stakeholders.
Finalizing the transaction and implementing the transition of control or management within the targeted NBFC.

Required Document

LIST OF DOCUMENTS REQUIRED

Basic Incorporation documents of the company
Statutory auditor’s certificate
Statutory auditor’s certificate in adherence to prudential norms
Basic information about the management of the company
Basic information about the shareholders of the company
Banker’s report of the company, shareholders, and management of the company.
CIBIL report of the company, shareholders, and management of the company.
Business Plan of the company for the next 5 years
Any other information as required by the RBI.
Details of Companies in which the proposed shareholder/ director holds substantial interest.
Copy of board resolution passed for the approval of change in control and management of the company.

Benifit

The profit of Target Corporation has experienced a notable upturn.
A reduction in competitive pressures has been observed.
Sales or revenue generation has seen a significant uptick.
Economies of scale have been realized, leading to enhanced operational efficiency and cost savings.
The distribution network has undergone expansion, broadening the reach and accessibility of products or services.

Common Mistake

COMMON MISTAKES