Following is a detailed note on Incorporation and Registration of Non-Banking Finance Company – Factor (NBFC-Factor).
A) INTRODUCTION
With over 15 years of expertise, we are a leading Corporate Consultancy Firm & Practicing Company Secretaries (PCS) Firm, specializing in regulatory compliance, corporate governance, and advisory services. We assist businesses in navigating complex legal frameworks, ensuring seamless compliance with corporate laws, SEBI regulations, RBI guidelines, and other statutory requirements.
Our firm is committed to delivering strategic, timely, and precise solutions to corporates, start-ups, and investors.
B) NBFC:
A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 2013 engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property. A non- banking institution which is a company and has principal business of receiving deposits under any scheme or arrangement in one lump sum or in installments by way of contributions or in any other manner, is also a non-banking financial company (Residuary non-banking company).
C) NBFC – FACTOR :
An NBFC-Factoring (Non-Banking Financial Company – Factoring) is a financial institution that primarily engages in the business of factoring receivables. Factoring is a financial service where businesses sell their outstanding invoices (accounts receivables) to the NBFC-Factoring company to improve liquidity and manage cash flow.
D) KEY RBI REGULATIONS FOR NBFC-FACTORING
✅ Regulatory Authority: Reserve Bank of India (RBI)
✅ Governing Laws:
- The Factoring Regulation Act, 2011
- RBI Master Directions for NBFC-Factoring Companies
- Prudential Norms for NBFCs
E) BROAD CLASSIFICATION OF NBFC’s:
- NBFCs accepting public deposits
- NBFCs not accepting public deposits
F) REGULATION FOR NBFCS NOT ACCEPTING PUBLIC DEPOSITS:
NBFCs not accepting public deposits can be further classified in 2 categories:
- NBFCs engaged in Loan Investment, Hire Purchase Finance and Equipment Leasing
- NBFC which acquires shares or securities of their group companies Core Investment Company
G) TYPES OF FACTORING SERVICES OFFERED BY NBFCS
| Type | Description |
| Recourse Factoring | The seller retains the risk if the debtor defaults |
| Non-Recourse Factoring | NBFC bears the risk of default |
| Domestic Factoring | Both seller and debtor are in India |
| Export Factoring | Seller is in India, but debtor is overseas |
| Reverse Factoring | NBFC pays suppliers upfront on behalf of buyers |
| Invoice Discounting | Businesses get funds against invoices without selling them |
H) MINIMUM CAPITAL REQUIREMENT FOR NBFC-FACTORING
Criteria |
Requirement |
Minimum Net Owned Fund (NOF) |
₹10 crore |
Capital Adequacy Ratio (CAR) |
At least 15% |
Asset-Classification Norms |
As per RBI NBFC guidelines |
Correction: Earlier, NOF was ₹5 crore, but as per the latest RBI guidelines, it is now ₹10 crore for NBFC-Factoring registration.
I) SCOPE OF WORK FOR NBFC LICENSE:
- Preparation of documents Affidavits, Declaration, Resolutions, and all other supporting documents with respect to Application to Reserve Bank of India
- Filing of Application for NBFC License with RBI in accordance with the RBI Rules & Regulations;
- Preparation of Projects, Profiles, documentations and to do submissions before Hon’ble RBI
- To guide for documentations and take follow-ups with Hon’ble RBI
- To do preparation and take care of interview before Hon’ble RBI
- Representation before RBI till obtaining
J) PLACE OF RENDERING SERVICES:
The place of rendering services generally shall be our office situated at Office No. 106, Sr. No. 55, Sukhaniwas, Mangalwar Peth, Pune – 411011, Maharashtra, India.
K) PROFESSIONAL FEES:
Professional fees shall be as mentioned below:
| Sr.
No. |
Particulars | Fees (INR) |
| 01. | Incorporation and Registration of NBFC Factor with the RBI. | To be discussed in Meeting |
**Plus GST @ 18% applicable
**Government fees & Out of Pocket Expenses will be at actual.
L) TERMS AND CONDITIONS:
- Assigner shall nominate specific person(s) for co-ordination and shall provide relevant data support in concern assignment Mr. Pramod Ladda will be assigned person.
- All the payments should be made in the name of “Ladda Bhutada & Associates”.
- All the disputes shall be subject to Pune Jurisdiction.
- Termination of this contract requires 30 days’ notice.
- Payment Terms- 60% advance along with Work Order, 40% after submission of Application for appeal.
- GST- Extra as Applicable.
Incaseofanyexplanation/informationneeded,pleasefeelfreetocontact us.
Thanking you and assuring best professional services
Sd/-
CS IP PRAMODKUMAR R. LADDA
Company Secretary & Insolvency Professional
