Sell NBFC

As the non-banking financial company (NBFC) industry has boomed in India, there has been a significant increase in the number of NBFCs. With the industry growing at a rapid pace, the question for most NBFCs is how to sell their company. In order to successfully sell your company, you need to understand your target acquirer and know how to promote it to them.

What Is A Non-Banking Financial Company?

A non-banking financial company, or NBFC, is a financial firm outside the banking system. It offers a wide range of financial services and is often the only financial institution that caters to a specific segment of the market. A NBFC is, in essence, a financial institution that is not a bank. It is a private company with a limited liability company registered under the Companies Act, 2013. NBFCs are regulated by the Reserve Bank of India, the Financial Services Regulatory Authority (FSRA), and the National Company Law Tribunal (NCLT).

NBFCs are nonbank financial companies that seek permission from business entities to buy and sell their assets to the entity that has taken control of the business. When the assets and liabilities are transferred to the acquirer, the balance sheet shows a zero result. The organizations that share the business entities show their success and defeat in the business of buying and selling financial assets and the business of nonbank financial institutions.

The banking sector in the past year has grown at a rapid pace, meeting the financial needs of a diverse range of customers across the country who don't have access to the banks and their services. The license is provided by the Reserve Bank of India (RBI). The NBFCs are organizations that work in the fields of finance, loans, and advances, stocks, bonds, and the purchase of shares, debentures, and securities from the government and other market entities. They also accept deposits, deliver credits, operate in the insurance industry, engage in hire-purchase contracts and lease agreements, and perform other tasks to channel the limited financial resources for wealth creation. The NBFCs meet the growing financial demand of the financial sectors. 

The Reserve Bank of India's guidelines state that the process for purchasing and selling NBFCs is straightforward and demanding at the moment.

If you own a non-banking financial company, you need to consider selling your company. This is because the market for non-banking financial companies is shrinking due to large requirements and changes made by the RBI. As per the recent amendment made by the RBI, the regulatory The net owned fund (NOF) for the NBFC-ICC, NBFC-MFI, and NBFC factors is increased to Rs 10 crore, for which the details are given below: SP

However, there are still a few NBFCs for whom the requirement of the NOF is only Rs. 2 crore, such as NBFC-P2P, NBFC-AA,  and NBFCs with no public funds and no customer interface. The existing regulatory minimum net owned funds for the NBFCs (IDF, IFC, MGC, HFC, and D) have not changed yet. 

There are a few different ways to sell your company that may be right for you. You could sell it to a bank, sell it to another NBFC, or even sell it to the government. However, you should consider the risks associated with these options. Contact our expert member for more information and to discuss the process of selling in detail.

If you want to sell your non-banking financial company, you need to make sure that it is profitable and that there is a demand for it. You should also make sure that the company has a strong brand. It is also important to consider the condition of the company's finances and the condition of the company's management. If the company is profitable, there is If there is a demand for it and the company's management is in good condition, it will be easier to sell the company.

The sale of an NBFC requires two parties (the buyer and seller) for the transaction of the deal. As per the RBI guidelines, an NBFC can be traded to another company. The sale of the NBFCs requires the merger of two companies into one. The sale process is initiated with the following:

• The prior approval from the RBI is required, whether there is change in the management of the company or not. The due diligence and check of the Acquirer eligibility criteria.
• Firstly, the general meeting shall be held of both the Directors, the NBFCs seller and the Acquirer Companies, wherein the approval of the sale of NBFC is made.
• After the confirmation through the Board meeting, the Seller will show the Acquirer all the documents relating to the business administration. After the clearance of valid documents from the Acquirer Company, the MOU will be signed by both the NBFCs Seller and Acquirer, and the seller has to give a token money to the Acquirer Company as a confirmation of the buying.
• The seller needs to send to RBI the Documentation including MOU, the KYC documents of the Proposed buyer, and the business plan of the proposed Acquirer for the next 3 years, and the documents are required to be submitted to the nearest regional office of the RBI.
• Resolving the queries and issues being raised by the RBI to the seller.
• Subsequently, The existing balance sheet and assets and liabilities of the Seller needs to be paid off, and the Acquirer must get the zero balance sheet in the Company's name.
• The Net worth and prices of the NBFCs that are for sale will be calculated through the competent person (such as CA) on the date of sale of the Company.

Procedures needs to be followed for the sale of the NBFCs:

• Name of the Company
• Business address of the Company
• Telephone number/E-mail address of the Company 
• PAN number of the Income Tax act
• Name and Contact details of the Compliance officer
• Line of business
• Details of the Major Shareholders and the line of activity, of corporates
• Name of the Principal and overseas bankers
• Name of the Regulators (RBI, SEBI, IRDA, PFRDA, NHB or any other foreign regulator)
• Companies name in the groups as defined under the prudential norms directions 
• Name of the Companies in the group that are the NBFCs
• Name of the Companies in the group which have been prohibited from the accepting of Deposits prosecuted by the RBI.
• Details of the prosecution, pending or commenced or resulting in conviction in the past against the corporate violation 
• Whether the corporate or the defaulting companies has been in last five years in respect of the credit facilities obtained from the entity or bank
• Particular of the Corporate has been found guilty of violation of the rules/regulations/legislative requirements by custom/excise/income tax/foreign exchange/other revenue authorities, 
• The corporate has been subject to the investigation of the government department or agency
• The promoter corporate/majority shareholder of the promoter corporate, if the Corporate has ever applied to RBI for the COR which has been rejected.