{"id":11587,"date":"2020-06-27T11:52:42","date_gmt":"2020-06-27T06:22:42","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=11587"},"modified":"2021-01-13T12:33:40","modified_gmt":"2021-01-13T07:03:40","slug":"buying-and-selling-of-nbfcs-in-india","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/buying-and-selling-of-nbfcs-in-india\/","title":{"rendered":"Buying and Selling of NBFCs in India: A Complete overview"},"content":{"rendered":"\n<p class=\"has-drop-cap\">In financial terms, the buying of NBFC seldom refers to the acquisition of a corporate, whether by approval, wherein the seller is ready to give to complete possession of the asset to the buyer.&nbsp; <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/buying-and-selling-of-nbfcs-in-india\/#Overview_on_Buying_and_Selling_of_NBFCs\" >Overview on Buying and Selling of NBFCs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/buying-and-selling-of-nbfcs-in-india\/#Procedure_for_buying_and_selling_of_NBFCs\" >Procedure for buying and selling of NBFCs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/buying-and-selling-of-nbfcs-in-india\/#Conditions_that_support_non-approval_of_RBI\" >Conditions that support non-approval of RBI<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/buying-and-selling-of-nbfcs-in-india\/#Checklist\" >Checklist<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/buying-and-selling-of-nbfcs-in-india\/#Prior_Public_Notice_in_case_of_amendment_in_management\" >Prior Public Notice in case of amendment in management<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/buying-and-selling-of-nbfcs-in-india\/#Preparation_of_Share_Purchase_Agreement\" >Preparation of Share Purchase Agreement<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/buying-and-selling-of-nbfcs-in-india\/#Handover_of_the_entire_assets_of_selling_Company_to_the_acquirer\" >Handover of the entire assets of selling\nCompany to the acquirer<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/buying-and-selling-of-nbfcs-in-india\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Overview_on_Buying_and_Selling_of_NBFCs\"><\/span>Overview on Buying and Selling of NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Whenever the seller transfers all the assets and liabilities to the buyer, the seller&#8217;s balance sheet exhibits no value whatsoever. Some corporates often come across exemplary success or unprecedented defeat after such hold and molds because the fundamental of buying and selling of <a href=\"https:\/\/corpbiz.io\/nbfc-registration\"><strong>NBFCs in India<\/strong><\/a> isn&#8217;t unique to the financial world. <\/p>\n\n\n\n<p>Although the process of buying and selling NBFCs in India is similar to conventional banks, there might be some chances of uncertainty and prejudice. The RBI has proposed some provisions in the context of buying and selling of NBFCs in India. Considering the market dynamics, the buying of NBFCs seems a more practical and conducive option than setting up the new venture. The complete acquisition of existing NBFC would take only two months i.e., 60 days<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Procedure_for_buying_and_selling_of_NBFCs\"><\/span>Procedure for buying and selling of NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em><strong>The buying and selling of NBFCs in India start with RBI&#8217;s approval under the given conditions, whose violation could lead to no results.<\/strong><\/em><\/p>\n\n\n\n<ul><li>Any buying and selling of NBFC in India may not ensure the\ncomplete alteration of the management.<\/li><li>Any alteration in the shareholding that leads to 26% selling or\nbuying of the paid-up equity capital of NBFCs increases over time.<\/li><li>Any significant changes in the management in more than 30% of\nthe directors of the NBFC. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conditions_that_support_non-approval_of_RBI\"><\/span>Conditions that support non-approval of RBI<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><em>There are some events in which the approval from <\/em><strong><em>RBI<\/em><\/strong><sup><a href=\"https:\/\/www.rbi.org.in\/Scripts\/BS_ViewForms.aspx\"><strong><em>[1]<\/em><\/strong><\/a><\/sup><em> is not necessarily mandatory. <\/em><\/p>\n\n\n\n<p><strong>Those are as follows:- <\/strong><\/p>\n\n\n\n<ul><li>The altering of 26% company&#8217;s share capital comes out to be a\nresult of a reduction in the capital or buyback of shares under the\nauthorization of the court. <\/li><\/ul>\n\n\n\n<ul><li>Some significant alterations in the management (30% to be\nspecific) due to rotation of the directors or changes in the independent\nDirectors. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Checklist\"><\/span>Checklist <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Documentation is\ncrucial when it\u2019s come to business deals, and NBFCs are no exception here. The\ninclusion of certain documents is mandatory in relation to the buying and\nselling of NBFCs in India. Documents are the only medium that justifies the\npurpose of the deal.&nbsp; <\/p>\n\n\n\n<p>Later, the application is forwarded to RBI on the Company&#8217;s letterhead for the approval purpose accompanied by the following crucial documents. <\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><img decoding=\"async\" width=\"644\" height=\"411\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-172.png\" alt=\"buying and selling of NBFCs Documents\" class=\"wp-image-11588\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-172.png 644w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/06\/image-172-300x191.png 300w\" sizes=\"(max-width: 644px) 100vw, 644px\" \/><\/figure><\/div>\n\n\n\n<p>Once these\nformalities are addressed, the application must be sent to the Regional Office\nof the Department of Non-Banking under whose jurisdiction the NBFC&#8217;s registered\noffice is located.<\/p>\n\n\n\n<p>The Reserve Bank might ask the applicant to clarify some doubts in the context of the submitted application. The applicant needs to be proactive in this aspect and must respond to such queries as quickly as possible to avert any delay that might hamper the processing of the application. The approval period of such an application demands around two to three months of time span. However, that depends on the nature of the case. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/participation-of-nbfcs-in-insurance-business\/\">A Complete Overview on Participation of NBFCs in Insurance Business<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Prior_Public_Notice_in_case_of_amendment_in_management\"><\/span>Prior Public Notice in case of amendment in management <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p><strong>The public notice shall indicate given details: <\/strong><\/p>\n\n\n\n<ul><li>The intention of the Company to sell its ownership or control. <\/li><li>The detail of the balance sheet of the target NBFCs, which is\nintended to get sold out. <\/li><li>The reasons stated by the Company that justifies the complete\ntransfers of assets and liabilities. <\/li><\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Preparation_of_Share_Purchase_Agreement\"><\/span><strong>Preparation of Share Purchase Agreement<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The <a href=\"https:\/\/corpbiz.io\/share-purchase-agreement\"><strong>share purchase agreement<\/strong><\/a> is a legal document that is prepared and approved by the concerning party i:e buyer and seller regarding the seller&#8217;s company management, which is being handed over its control to the buyer. And in the event, if any, consideration is remaining, shall be addressed within 31 days of the public notice or as mutually agreed by concerning parties. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Handover_of_the_entire_assets_of_selling_Company_to_the_acquirer\"><\/span><strong>Handover of the entire assets of selling\nCompany to the acquirer <\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>In the buying\nand selling of NBFCs in India, this is the last destination of this tedious\nprocess where both parties agreed to the purchase agreement and sign it to\nclose the deal. This sign act as a final stamp on the agreement where the\nassets of the transferor company will be discharged, and the liabilities will\nbe paid off. &nbsp;The buyer will receive a\nbank balance in the Company&#8217;s name, whose estimation is based on net worth as\non the date of acquisition. <\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span><strong>Conclusion<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\ntransparency, versatility, convenience, and performance are the few elements\nthat make NBFCs a standout choice among organized banking. The way NBFCs\nconfront financial issues of the concerning parties is more convincing than its\ncounterparts, which in turn helped them to grow excellent reputation overtimes.\n<\/p>\n\n\n\n<p>There is no\ndenying the NBFCs are the only contenders in the finance sector, which show the\nreal potential of lending money by averting the conventional barriers. It has\nprovided a much-required rigidity to the country&#8217;s financial system by\nproviding a hassle-free lending service to the help seeker at relaxed\nstandards. <\/p>\n\n\n\n<p>Since these institutions haven&#8217;t got the liberty of procuring public deposits that are repayable on demand, many eventually opt to sell out. The stringent RBI regulations are putting a lot of pressure on these institutions, which is the only reason for their unfortunate backout. Our CorpBiz group will be at your disposal if you want expert advice on any aspect of NBFC Registration. We will help you to ensure complete compliances concerning all the issues related with Buying and Selling of NBFCs in India based as per your desired activities, ensuring the fruitful and well-timed completion of your work.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/types-of-nbfcs-in-india\/\">\nTypes of NBFCs in India \u2013 An Overview<\/a><\/mark><\/p>\n\n\u200b\n","protected":false},"excerpt":{"rendered":"<p>In financial terms, the buying of NBFC seldom refers to the acquisition of a corporate, whether by approval, wherein the seller is ready to give to complete possession of the asset to the buyer.&nbsp; Overview on Buying and Selling of NBFCs Whenever the seller transfers all the assets and liabilities to the buyer, the seller&#8217;s [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":11590,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[91],"tags":[705],"acf":{"service_id":"8"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":5425,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/11587"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=11587"}],"version-history":[{"count":14,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/11587\/revisions"}],"predecessor-version":[{"id":24061,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/11587\/revisions\/24061"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/11590"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=11587"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=11587"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=11587"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}