Registration under RBI requirement
I applied for a personal loan with Ms Ganpati Finstock Consultant Pvt Ltd. situated at old hathras adda Aligarh up and it rejected my file as I made enquiry it is not listed by RBI under NBFC. I took help from PMO and my car is under process in up SSP of Aligarh and he is investigating but as the co people are saying that it is not required to have registration under RBI for consultancy for providing the advice I want to know is it important or as per legality required or not?
As per the RBI Guidelines in this regard, an approval from the RBI is mandatory for the NBFC’s. However, there are certain exemptions to few establishments falling under the category of Venture Capital Fund Companies or Insurance companies etc. As per Section 45-IA of the Reserve Bank of India Act, 1934, no Non-banking Financial company can carry on business of that of an NBFC without (a) obtaining a certificate of registration from the Reserve Bank or (b) having a Net Owned Funds of Rs. 200 lakhs. Certain other companies that don’t need a clearance from RBI to commence business are - Venture Capital Fund/Merchant Banking companies/Stock broking companies registered with SEBI, Insurance Company holding a valid Certificate of Registration issued by IRDA, Nidhi companies as notified under Section 620A of the Companies Act, 1956, Chit Fund companies as defined in clause (b) of Section 2 of the Chit Funds Act, 1982, Housing Finance Companies regulated by National Housing Bank, Stock Exchange or a Mutual Benefit company.
The Reserve Bank has got powers under the RBI Act 1934 to register, lay down policy, issue directions, inspect, regulate, supervise and exercise surveillance over NBFCs that meet the 50-50 criteria of principal business. A Loan Company means any company which is a financial institution and carries on its principal business by the providing of finance whether by making loans or advances or otherwise for any activity other than its own but does not include an Asset Finance Company.
Therefore, as per the question asked – the answer remains that as per the legality, an NBFC is required to have a certificate of registration issued by the RBI.
 (1) Notwithstanding anything contained in this Chapter or in any other law for the time being in force, no non-banking financial company shall commence or carry on the business of a non-banking financial institution without-
(a) obtaining a certificate of registration issued under this Chapter; and
(b) having the net owned fund of twenty five lakh rupees or such other amount, not exceeding two hundred lakhs, as the bank may, be notification in the Official Gazette, specify.
(2) Every non-banking financial company shall make an application for registration to the bank in such form as the bank may specify:
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