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RBI vide its Press Release dated 1st of December 2022 for Voluntary Surrender of CoR by NBFCs. In order to streamline the process of voluntary cancellation of CoR, the Reserve Bank of India has prescribed application form and checklist of documents to be submitted by the NBFCs/HFCs.

The applicant NBFCs may furnish the application enclosing the documents mentioned therein, to the Regional Office of the RBI under whose jurisdiction the NBFC is registered; however, the NBFCs falling under the jurisdiction of Mumbai Region, should apply to the Chief General Manager-in-Charge, Department of Supervision, Central Office, Reserve Bank of India, Centre I, World Trade Centre, Mumbai-400 005. The applicant HFCs may furnish the application along with documents through the National Housing Bank, Core 5-A, India Habitat Centre, Lodhi Road, New Delhi- 110003.

Surrender of NBFC license registration:

The company is empowered to surrender the NBFC registration in the following cases:

  • NBFC ceases to carry on a business of NBFI (Non-Banking Financial Institution) in India
  • NBFC has failed to comply with any condition of Certificate of Registration specified under the Act and additional conditions specified by the RBI at the time of issue of Certificate of registration
  • NBFC fails to fulfill the conditions mentioned with respect to the affairs and capital of the Company.
  • NBFC fails to comply with any of the direction issued by the Reserve Bank of India
  • NBFC fails to maintain the book of accounts in accordance with the requirements of any law or provisions of the Act or RBI directions
  • NBFC fails to submit or offer for inspection its books of account and other relevant documents
  • NBFC has been prohibited from accepting the deposits by the order made by the Bank under the provisions of this Chapter, and such order has been in force for a period of not less than 3 months.

Documents:

1). Application in prescribed format consisting of details about company and reasons for surrender of CoR;

2). Latest Audited financial statements to be submitted;

3). Board Resolution indicating that:

In principal approval of Board of directors;

It has repaid all the existing public deposits, stopped accepting fresh public deposits and will not accept the same in future (applicable only for deposit taking NBFCs/ HFCs);

the company has stopped NBFI activity w.e.f. ____ (indicate date) and will not carry out the same in future;

the company will approach the Reserve Bank for CoR afresh, in future, in case it intends to carry out NBFI/ HFI activity;

4). Auditor Certificate (SAC) indicating that:

the company has repaid all the existing public deposits and stopped accepting fresh public deposits (applicable only for deposit taking NBFCs/ HFCs);

the company has stopped NBFI activity w.e.f. ____(indicate date). As on ___ (indicate date of latest financials), the Financial Assets/ Total Assets and Financial Income/Gross Income is at __ % and __ % respectively;

5). Write-up in brief on the details of the business of the company that it proposes to undertake post cancellation of CoR.

6). i) it will apply to RoC, MCA within 30 days post cancellation of CoR for suitably changing its Name and Industrial Activity Code, which will not represent carrying out financial business.

(ii) it will amend its Memorandum of Association (MoA) deleting clauses related to financial business from its Main objects, within 30 days post cancellation of CoR.

(iii) it will submit the audited financials for next 2 fiscal years to the Reserve Bank, within 30 days post finalization of annual accounts, but not later than 31st December. [NBFC-HFC will submit audited financials to NHB] 

Effects of the surrender of NBFC License Registration

i). it will apply to RoC, MCA within 30 days post cancellation of CoR for suitably changing its Name and Industrial Activity Code, which will not represent carrying out financial business.

(ii) it will amend its Memorandum of Association (MoA) deleting clauses related to financial business from its Main objects, within 30 days post cancellation of CoR.

(iii) it will submit the audited financials for next 2 fiscal years to the Reserve Bank, within 30 days post finalization of annual accounts, but not later than 31st December. [NBFC-HFC will submit audited financials to NHB]

When the company surrenders all of its certificates, the company will not be able to deal with other businesses of a non banking financial institution. The Reserve Bank of India allows the Certificate of registration. These NBFCs who have surrendered their NBFC Registration approved to them by the Reserve Bank of India will limit themselves to carry on further business. The non banking financial company will decide to surrender NBFC registration as ‘non- banking finance company’ cannot accept any form of public deposits.

The powers related surrender of the NBFC registration is been provided under Section 45-IA (6) of the Reserve Bank of India Act, 1934, the reserve bank will further cancel their Certificate of Registration of companies who surrender their registration for the non-banking financial companies to the Reserve Bank of India.

The companies shall not transact the business of a non-banking financial institution, as mentioned under clause (a) of section 45-of the Reserve Bank of India Act, 1934. Now NBFCs cannot take part in the business activities as mentioned under the non banking financial institutions.

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Anyone having any query regarding this process or any other query regarding any corporate law you can reach CS Varun Aggarwal (Varun Aggarwal and Associates)at varunx099@gmail.com and also at 9599149592 or whatsapp 8802841642

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