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    Does Shares Trading Company termed as NBFC

    Posted By : SHALU / Published on : 02-Feb-2022 01:33 PM / View : 1057 / Comment : 2

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    Dear Members,

    If I want to start a Company for only dealing in shares (not Investment), will it be termed as non-deposit taking NBFC ?

    Please advise.

    Read more on : termed nbfc company trading shares does

    • If the Company satisfy the 50:50 criteria of Income and assets then the Company is an nbfc and need licence from RBI.

      03-02-2022 / 08:47:23 AM
    • No, a company dealing only in shares and not taking any deposits would not be considered a non-deposit taking NBFC. Non-banking financial companies (NBFCs) are defined under the Reserve Bank of India Act, 1934, and include any company engaged in the business of providing loans and advances, acquiring shares, debentures, and other securities, or leasing, hire-purchase, insurance business, or chit fund business.

      However, if the company is engaged in the business of acquiring shares or other securities, it may be required to comply with the securities laws and regulations, such as the Securities and Exchange Board of India (SEBI) regulations. Additionally, if the company is engaged in trading of shares or securities, it may also be required to obtain certain licenses and registrations from the concerned authorities, such as the Securities and Exchange Board of India (SEBI) and the stock exchanges.

      But, According to the Reserve Bank of India (RBI), a company is considered an NBFC if it meets the following criteria:

      1. It is a company registered under the Companies Act, 1956/2013;
      2. Its principal business is the lending, investment, or both in securities;
      3. It holds more than 50% of its total assets in the form of financial assets (loans, advances, shares, debentures, bonds, etc.); and
      4. Its financial assets constitute more than 50% of the company's total income.

      If a company meets these criteria, it is considered an NBFC and must obtain a license from the RBI to operate. However, if a company does not meet these criteria, it is not considered an NBFC and does not require an RBI license to operate.

      10-04-2023 / 10:49:49 AM
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