Nbfc registartion

Nandukumar Kamat (Querist) 13 March 2018 This query is : Resolved
Dear Sir,

1.As per RBI, for a company to be classified as an NBFC, to decide on its principal business, it will have to satisfy the two tests of assets and income. The financial assets should be more than 50% of total assets) and the income from financial assets should be more than 50% of the gross total income. Both these need to be satisfied for a company to be regarded as an NBFC.

2.Our Company carrying Investment business (Only Purchase & Sells of Shares & Mutual Funds) without obtaining the certificate of registration from the RBI. Last 7 years the Company invests in only shares & Mutual Fund & Total Gross Income of company from only Financial Assets Only. Now our company received notice from RBI regarding the Registration of NBFC. In this notice they are given three option :

1) Apply for COR 2)Merge company with another NBFC 3)Wind up the Business of NBFI.

Our Company Paid up Shares Capital is 24 Lacs & reserve is 1.03 Crores.
Net Owned Fund calculation as per RBI Formula is Rs.17.07 Lacs.

Clarifications required:

We have a investment company whose main objects clause includes investments activities. If they invest more than 51% of total assets in Investments and their 51% of total income comes from dividend & Capital Gain income. The company is not accepting any public deposits and investments are made for long term purpose and not for trading- Will it be treated as an NBFC company? Since their Net Owned Funds (NOF) are less than 2 crores(17.07 Lacs as per Calculations). Can we continue the investment activity without taking RBI registration?

Please provide me a simple letter which has to be given to RBI in respect of Notice received from RBI for Registration of NBFC.

Please advise the same in above matters.

Thanks & Regards
N. K.

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Advocate Kappil Cchandna (Expert) 20 March 2018
Sir,

Kindly email me the letter at advocate.kapilc@gmail.com

Warm Regards
Kapil Chandna Advocate
9899011450,9911218741
https://kapilchandna.legal/

Guest (Expert) 20 March 2018
Memorandum & Articles of Association of the company will have to be examined in detail with specific reference to the letter of the RBI. Also. please make clear with reference to which of your documents, the RBI issued such letter of directions to you?

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