As per the Companies Act 2013, Non-Banking Financial Company or NBFC is that type of company which is involved in the business of receiving Loans and Credit Facilities, Acquisition of Bonds/Stocks/Shares, Hire-Purchase, Leasing, Assets Financing, Insurance, Currency Exchange, Peer to Peer Lending, Hedge Funds, Chit Business, etc. NBFCs are companies registered under the Companies Act, and, regulated according to the provisions mentioned in Chapter III B of the RBI Act 1934.

The companies that are in the business of:

• loans and advances,
• investments in stock/equity/shares/bonds/debentures and other Govt securities,
• hire-purchase,
• hire-purchase,
• lease,
• hedge funds,
• currency exchange,
• insurance business,

But they cannot be involved in:

• agricultural activity,
• industrial activity,
• purchase/sale of any goods and services (except securities), and
• sale, purchase, or construction of the immovable property.

NBFCs provide various banking and non-banking services to their clients. They do not hold banking licenses but their functions are similar, and, therefore, regulated and supervised by RBI.
The primary business activity of the NBFCs is to raise funds from public depositors & investors and then lend further. NBFCs are the option for the banking and unregulated financial sector.
Though their financial activities are quite similar to banks, still, there are quite a few differences between the two. For example, the deposits in NBFC are not insured. Or, unlike banks, all NBFCs are not allowed to accept deposits payable on demand or issue cheques.
Because of these financial constraints, strict RBI regulations, and other reasons, the operations are sometimes difficult to keep up.
So if you are looking to sell NBFC, then the expert team of LegalRaasta for a smooth and hassle-free process.

The sale serves to merge two companies into one, and, is usually initiated by the larger company to take over a smaller one. To sell NBFC, its balance sheet has to stand at null. And all its assets and liabilities are transferred to the buyer or the Acquirer.
And if you are looking to sell your NBFC, you need to find an Acquirer Company. Listing your NBFC for sale at the LegalRaasta portal would help you get a genuine buyer and the best prices for your company.
It is further recommended to have all the deals and agreements written, and signed, concerning the Acquirer to avoid any ambiguity and misunderstanding in the future.
RBI has provided a step-by-step guide to buy or sell NBFC to have more clarity. And these compliances are mandatory.

The entire procedure of the sale, RBI approvals, changes in the management of the NBFC would take at least 2-3 months. Therefore, the seller must also take out due diligence and check the credential of Acquirer Company and that it will be able to hold on during this period.

• The first step to sell NBFC is that the Board of Directors of both, your NBFC and the Acquirer companies, approve of this sale, in a General Meeting.

• Once consent from the Board has been received, the Acquirer will go through your company’s documents related to the business and administration. Once they confirm for you to proceed with the closure, you and the Acquirer will be signing an MOU. At this time, you would be given some token money as confirmation of buying.

• To sell your NBFC, the KYC Documents of the new Directors need to be sent to RBI and must be prepared. Also, Business Plan and Projection are to be prepared for the next 3-years for the new Acquirer.

• Submit these documents with the nearest regional office of RBI where the registered office of the company is located.

• Coordinating with and responding to any queries raised by RBI concerning the sale.

• Once RBI approves of the sale, a public notice is to be issued. As per its guidelines, this should be published in one leading daily national and one leading daily local newspaper, indicating that a change in management is planned and invite objections, if any, from the public or interested parties.

• After 31 days of the newspaper, publication are over, both parties can sign the Share Purchase Agreement. The management and administration will be handed over. And the balance payment to be received.

  The final day of the hand-over can be decided between you and the Acquirer.

• Further, as per RBI regulations, all assets existing in your balance sheet are to be liquidated and all liabilities are to be paid off. So that the Acquirer gets a null and void balance sheet in the name of the company.

• The price of your NBFC for sale will be calculated as net worth as of the date of sale. The calculation method of this net worth has been prescribed by RBI.

  Contact the team of professionals at LegalRaasta to sell NBFC and we will assist along every step of the way.

RBI Conditions for Issuing Public Notice Prior to Sale of NBFC

• After RBI’s Approval to Sell Your NBFC on the Planned Date
• Announce to the Public by Issuing a
• Public Notice in One Leading Daily National Newspaper
• Public Notice in One Leading Daily Vernacular Newspaper
• At least 30-days Before the Planned Date of Hand-over
• By Acquirer, Target, and Other Parties Concerned
• Clearly Mentioning the Planned Transaction, the Date, and Other Information.

Once RBI approves for you to sell your NBFC, a public notice is to be given in one leading national and one leading local newspaper at least 30-days indicating the planned sale of shares, or transfer of control. To enable members of the public to raise an objection, if any.

Conditions concerning the publication are:

• At least 30-days before the planned date of the actual sale or transfer of the ownership by sale of shares, or transfer of control (whether with or without the sale of shares), a public notice is to be issued.
• Such public notice is to be given by all the parties concerned after receiving prior approval of RBI. They may choose to get this published together or separately.
  The public notice must mention clearly, the plan to sell or transfer ownership/control of the NBFC. The particulars of the transferee and the reasons for this transaction must be shown.
• The notice shall be published in at least one leading daily national newspaper and another leading daily newspaper in the local language of the place of registered office.