The Reserve Bank of India (RBI) on Friday simplified the process of registration of new non-banking finance companies (NBFCs) by reducing the application form and the checklist of documents from the existing set of 45 documents to just seven and in some cases eight.
And deposit taking and non-deposit taking NBFCs would have separate applications forms so that the registrations can be expedited faster.
RBI in statement said, “This is being done so that the registration of new NBFCs would be smoother and hassle-free.” It said that the checklists mentioned are indicative and not exhaustive. “The RBI, may, if necessary, call for any further documents to satisfy itself on the eligibility of the company seeking registration as NBFC. In the event of the RBI calling for further documents, the applicant must respond within a stipulated time of one month,” it said.
The processing applications of non-deposit taking NBFCs would be on the fast-track mode. As these companies will not have access to public fund and will not have customer interface, they will be subjected to less intensive scrutiny and due diligence. The scrutiny for the deposit taking NBFCs and those who have a customer interface would be more elaborate and hence require a separate application form.
RBI has been converging regulations for NBFCs on the lines of its banking sector rules as the difference between the NBFCs and the banks get blurred. NBFCs like banks are now into infrastructure financing and housing financing, agri financing and meeting the funding needs of the micro, small and medium Enterprises. The changes in the registration process of NBFCs is in line with the announcement made in the first bi-monthly monetary policy Statement, 2016-17 of simplifying procedures for the sector.
Talking about harmonisation of regulations for NBFC sector with commercial banking, R Gandhi, deputy governor, RBI, recently said that the central bank’s stance is to harmonise, not equalise the regulations. “Similar activities should be subject to similar regulation; this is driven primarily to remove arbitrage,” Gandhi had said in April.