{"id":13972,"date":"2020-07-30T12:44:46","date_gmt":"2020-07-30T07:14:46","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=13972"},"modified":"2025-01-23T18:47:17","modified_gmt":"2025-01-23T13:17:17","slug":"procedure-for-appeal-against-cancellation-of-nbfc-registration-by-rbi","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/procedure-for-appeal-against-cancellation-of-nbfc-registration-by-rbi\/","title":{"rendered":"Procedure for Appeal against Cancellation of NBFC Registration by RBI"},"content":{"rendered":"\n<p class=\"has-drop-cap\">An NBFC must seek Certificate of NBFC Registration as per with the rules and regulations mentioned under <strong><em>Section 45-1A, RBI Act, 1934<\/em><\/strong>. In addition, it must be duly registered under the Companies Act, 2013. The RBI can grant or cancel the Certificate of Registration for an NBFC. However, it is an option to <strong><em>appeal against cancellation of NBFC registration<\/em><\/strong>.&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\/procedure-for-appeal-against-cancellation-of-nbfc-registration-by-rbi\/#Cancellation_of_NBFC_Registration_by_RBI\" >Cancellation of NBFC Registration by RBI<\/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\/procedure-for-appeal-against-cancellation-of-nbfc-registration-by-rbi\/#An_appeal_against_cancellation_of_NBFC_Registration\" >An\nappeal against cancellation of NBFC Registration<\/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\/procedure-for-appeal-against-cancellation-of-nbfc-registration-by-rbi\/#Certificate_of_Registration_is_required_for_every_NBFC\" >Certificate of\nRegistration is required for every NBFC<\/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\/procedure-for-appeal-against-cancellation-of-nbfc-registration-by-rbi\/#RBI_has_cancelled_a_large_number_of_NBFC_License_in_2016_in_India\" >RBI has cancelled a\nlarge number of NBFC License in 2016 in India<\/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\/procedure-for-appeal-against-cancellation-of-nbfc-registration-by-rbi\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Cancellation_of_NBFC_Registration_by_RBI\"><\/span>Cancellation of NBFC Registration by RBI<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p> If at any time, the RBI found that an NBFC is conducting the business in the manner NOT specified in the Act or not acting in favor of public interest, and then it can cancel the certificate of registration conferred to an NBFC. RBI must provide an opportunity to the concerned NBFC for clarification before the Cancellation of Registration. Only, when RBI feels a delay will result against public interest, then <a href=\"https:\/\/corpbiz.io\/nbfc-registration\"><strong>NBFC registration<\/strong><\/a> must not be cancelled instantaneously.  <\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Reasons for\nCancellation of NBFC Registration<\/h3>\n\n\n\n<ul>\n<li>When an <strong><em>NBFC ceases to carry on the business<\/em><\/strong> of the non-banking\nfinancial institution in India<\/li>\n\n\n\n<li>In case if NBFC fails to comply with the registration conditions\nspecified under the Act and an additional RBI specified conditions at the time of\nissue of a certificate of registration. Such as, if it fails to maintain the\nminimum paid-up capital requirement, which is not <strong><em>below INR 2 crore.<\/em><\/strong><\/li>\n\n\n\n<li>In case NBFC <strong><em>fails to fulfill the specified conditions<\/em><\/strong> with respect to the\naffairs and capital of a Company. <\/li>\n\n\n\n<li>In case of <strong><em>non- compliance by NBFC<\/em><\/strong> with any direction issued by the RBI<\/li>\n\n\n\n<li>In case NBFC <strong><em>fails to maintain the books of accounts<\/em><\/strong> in accordance with the\nprovisions of the RBI Act or directions issued for the\nsame. <\/li>\n\n\n\n<li>In case NBFC <strong><em>accepts the deposit that has been prohibited<\/em><\/strong> by an order made\nby the RBI, or by an order has been in force.<\/li>\n\n\n\n<li>In case NBFC <strong><em>fails to submit any other relevant documents<\/em><\/strong> to the RBI for\ninspections.<\/li>\n<\/ul>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/prerequisites-of-nbfc-registration-in-india\/\">Prerequisites of NBFC Registration: A Comprehensive Overview\n<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"An_appeal_against_cancellation_of_NBFC_Registration\"><\/span>An\nappeal against cancellation of NBFC Registration <span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<ul>\n<li>On appeal against the cancellation of NBFC registration, the aggrieved\ncompany by the order issued by RBI can file <strong><em>an appeal within the period of 30\ndays<\/em><\/strong> from the date of the order of cancellation of the NBFC\nregistration is communicated to the company.&nbsp;\n<\/li>\n\n\n\n<li>An appeal must be filed <strong><em>with Central Government<\/em><\/strong>, and the\nfinal decision must be made by the Central Government when an appeal has been\nreferred to it or also in a case where no appeal can be preferred.<\/li>\n\n\n\n<li>The appeal can also be filed <strong><em>if there is a case of delay. It can be filed\nalong with the Condonation of Delay<\/em><\/strong> Application within a reasonable\ntime, along with proper justification. <\/li>\n<\/ul>\n\n\n<div class=\"wp-block-image\">\n<figure class=\"aligncenter\"><img decoding=\"async\" width=\"589\" height=\"412\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/07\/image-138.png\" alt=\"appeal against cancellation of NBFC Registration \" class=\"wp-image-13973\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/07\/image-138.png 589w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/07\/image-138-300x210.png 300w\" sizes=\"(max-width: 589px) 100vw, 589px\" \/><\/figure><\/div>\n\n\n<h3 class=\"wp-block-heading\">Before cancellation an\nopportunity for being heard given by RBI.<\/h3>\n\n\n\n<p>Unless it is in the opinion that the delay in canceling the certificate of registration will prejudicial to the public interest or the non-banking financial company or the interest of the depositors, the RBI, before passing an order of cancellation, must provide an opportunity of being heard to the Company.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Where to file an appeal\nagainst cancellation of NBFC Registration is filed? <\/h3>\n\n\n\n<ul>\n<li>An appeal can be filed before an Appellate Authority in the department\nof financial services,<strong><em> under Section 45-IA, sub-section (7) of the\nRBI Act, 1934.<\/em><\/strong> <\/li>\n\n\n\n<li>The time duration to <strong><em>file an appeal is within 30 days<\/em><\/strong>,\nstarting from the date of receipt of cancellation order.<\/li>\n\n\n\n<li><strong><em>Writ Petition filed under Article 226<\/em><\/strong> before the High Court.<\/li>\n<\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Compliance before\nfiling an Appeal against cancellation of NBFC Registration<\/h3>\n\n\n\n<p><strong><em>Following compliances\nfollowed before filing an Appeal against cancellation of NBFC Registration<\/em><\/strong>:<\/p>\n\n\n\n<ul>\n<li>Double-check your ROC (Registrar of Companies)<\/li>\n\n\n\n<li>Compliance Check your <strong>RBI (Reserve Bank of India<\/strong><sup><a href=\"https:\/\/www.rbi.org.in\/\"><strong>[1]<\/strong><\/a><\/sup><strong>) <\/strong>Returns (NBS-9) <\/li>\n\n\n\n<li>Tax Audit Reports <\/li>\n\n\n\n<li>Quality test of the Assets and Liability <\/li>\n\n\n\n<li>Minimum NOF (Net Owned Fund) of Rs 2 crore <\/li>\n\n\n\n<li>Adequate reason for filing an appeal<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Certificate_of_Registration_is_required_for_every_NBFC\"><\/span>Certificate of\nRegistration is required for every NBFC<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Every\nNBFC must obtain the certificate of registration from RBI before undertaking\nany business. <strong><em>Following conditions are required to be complied by each NBFC at the\ntime of obtaining a certificate of registration:<\/em><\/strong><\/p>\n\n\n\n<ul>\n<li>Company has to be registered as per the provisions of the <strong><em>Companies\nAct 2013<\/em><\/strong> <\/li>\n\n\n\n<li>A Company is required to undertake the financial activities mentioned in\nthe provisions of the <strong><em>RBI Act, 1934<\/em><\/strong>. <\/li>\n\n\n\n<li>A company must get an NBFC registration certificate. If at any time,\nthere is an increase in the business&#8217;s financial flow, such that it <strong><em>exceeds\n50%<\/em><\/strong> of the company&#8217;s total capital asset.<\/li>\n\n\n\n<li>A minimum Paid-up capital fund of <strong><em>INR 2 Crore<\/em><\/strong> shall be held by the\ncompany.<\/li>\n\n\n\n<li>It must ensure that the company must be in a position to <strong><em>pay its present or future depositor&#8217;s claims.<\/em><\/strong> It has an adequate capital structure and earning prospects, and affairs of the company are not detrimental to the interest of its present or future depositors. The RBI may ask to inspect the books of account of the company. <\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"RBI_has_cancelled_a_large_number_of_NBFC_License_in_2016_in_India\"><\/span>RBI has cancelled a\nlarge number of NBFC License in 2016 in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>RBI has cancelled\nmany NBFC&#8217;s certificates of registration, which were fraudulently impersonating\nas NBFC. Many entities were promising loans to the needy people at attractive\nrates and collecting money from them as processing charges for the\nloans\/advances and vanish with the money so collected. In <strong>2016,<\/strong> RBI had cancelled the certificate of registration, nearly 26\nnon-banking financial companies found in fraudulent activity.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>(NBFCs) Non-Banking Financial Companies are the financial institutions which are an important and integral part of the Indian economy. NBFCs offer various services such as credit or loan, retirement plans, acquisition of shares\/stocks, leasing, merger activities, etc. For any NBFC to function, it&#8217;s mandatory to seek a Certificate of Registration that must be issued by the RBI. At <a href=\"https:\/\/corpbiz.io\/\"><strong>Corpbiz<\/strong><\/a>, we have experts which will help in NBFC registration and will guide you upon post <strong><a href=\"https:\/\/corpbiz.io\/nbfc-compliance\">NBFC compliances<\/a><\/strong>.<\/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\/step-by-step-nbfc-registration-procedure\/\">NBFC Registration: Step by Step Procedure\n<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>An NBFC must seek Certificate of NBFC Registration as per with the rules and regulations mentioned under Section 45-1A, RBI Act, 1934. In addition, it must be duly registered under the Companies Act, 2013. The RBI can grant or cancel the Certificate of Registration for an NBFC. However, it is an option to appeal against [&hellip;]<\/p>\n","protected":false},"author":10,"featured_media":13997,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[1],"tags":[821],"acf":{"service_id":"8"},"authorName":"Soumya Bajpai","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/01\/0.jpg","authorDescription":"Soumya has done LLB (Hons) and has a 2+years experience in writing. Her main interest is in reading judgments, new enactments and amendments taking around in law. She always strives to bring the best to work that she does.","postViews":10434,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/13972"}],"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\/10"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=13972"}],"version-history":[{"count":23,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/13972\/revisions"}],"predecessor-version":[{"id":68548,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/13972\/revisions\/68548"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/13997"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=13972"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=13972"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=13972"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}