Unlock Growth Potential with a Seamless NBFC Takeover
Expanding into the Indian financial market through the acquisition of a Non-Banking Financial Company (NBFC) can be a powerful strategy to enhance your business portfolio. Whether you’re looking to tap into the ever-growing lending market or expand your existing financial services, acquiring an NBFC provides a fast-tracked entry into a highly regulated sector.
At NBFC Advisory, we offer comprehensive, end-to-end NBFC takeover solutions that simplify the acquisition process, ensuring your business is equipped to thrive in this dynamic market.
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Why Opt for an NBFC Takeover?
Acquiring an NBFC is more than just a strategic move; it’s a way to hit the ground running in one of the world’s most vibrant financial markets. Here’s why an NBFC acquisition is an optimal choice:
Quick Market Entry:
Establishing a new NBFC from scratch involves time-consuming regulatory approvals and set-up procedures. With an acquisition, you bypass much of this, gaining immediate access to a licensed entity.
Pre-Approved Licenses:
One of the primary challenges of entering the Indian financial sector is acquiring the necessary licenses. With an NBFC takeover, you inherit all pre-existing regulatory approvals, making it easier to expand operations.
Established Operations:
Many NBFCs come with operational infrastructure, experienced teams, and an existing client base, giving you a head start.
Diversification of Offerings:
Whether you're in lending, investment, or another financial service, acquiring an NBFC allows you to diversify into new products and markets.
Regulatory Compliance:
Regulatory oversight in India’s financial sector is stringent. By acquiring an existing NBFC, you can leverage its compliance history to ensure smooth operations and avoid costly delays in approval.
Our Expertise in NBFC Takeover: A Tailored Approach
At NBFC Advisory, we pride ourselves on our deep understanding of RBI regulations and the NBFC landscape. Our team brings over 15 years of experience in financial services, regulatory compliance, and corporate finance, enabling us to offer customized solutions for every client.
Here’s what sets us apart in the NBFC acquisition process:
Comprehensive Due Diligence
Before proceeding with any acquisition, understanding the target company’s financial health, regulatory compliance, and operational integrity is crucial. Our team conducts thorough due diligence, examining:
- Financial Statements: Ensuring the target NBFC’s financial records are accurate and up to date.
- Compliance History: Reviewing the company’s history of compliance with RBI regulations to identify any potential risks.
- Outstanding Liabilities: Identifying any unresolved liabilities, pending litigations, or regulatory penalties.
- Asset Quality: Analyzing the quality of assets and receivables on the NBFC’s books to ensure a sound acquisition.
Expert Transaction Structuring
Our team ensures that every acquisition is structured to maximize your benefits while minimizing risks. We work with you to:
- Negotiate Terms: Ensuring you get the best value for the acquisition.
- Optimize Tax and Legal Aspects: Structuring the transaction to ensure compliance with Indian tax laws and regulations while optimizing tax benefits.
- Risk Mitigation: Identifying and mitigating any risks involved in the takeover process.
End-to-End Regulatory Assistance
Sailing India’s regulatory system can be complex, but we handle the entire RBI approval process on your behalf. This includes:
- Filing of Applications: We prepare and file all necessary applications and documentation with the RBI.
- RBI Approvals: We coordinate with regulatory authorities to secure timely approvals for the transaction.
- Ongoing Compliance: Post-acquisition, we provide advisory services to ensure ongoing compliance with RBI and other regulatory requirements.
Seamless Post-Takeover Integration
Acquiring an NBFC is just the beginning. Our team helps you integrate the acquired NBFC into your existing business seamlessly. This includes:
- Management Transition: Assisting with leadership changes and management restructuring to ensure continuity.
- Operational Alignment: Aligning the acquired NBFC’s operations with your business goals and objectives.
- Policy and Framework Updates: Updating internal policies to reflect the new ownership structure and regulatory requirements.
NBFC Takeover?
The first step to kickstart the process of NBFC Takeover is to find an NBFC available for sale. With NBFC Advisory, we have experts helping you simplify the process by walking along through each step no matter how complex the procedure and documentation of the process of NBFC Acquisition/ NBFC Takeover with RBI is.
Here we simplify the steps of the process:
Key Steps in the NBFC Takeover Process
Acquiring an NBFC involves several critical steps that must be executed with precision. Here’s a step-by-step breakdown of how we guide you through the entire process:
Our journey begins with understanding your business goals and specific needs. We evaluate whether an NBFC takeover is the right fit for your growth strategy.
Based on your requirements, we help you identify potential NBFCs for acquisition, taking into account factors like industry focus, asset size, and regulatory status.
Once a target NBFC is identified, we conduct a comprehensive financial, legal, and compliance due diligence to assess the health of the company.
We work closely with you to structure the deal, ensuring favorable terms and minimizing risk. This step includes negotiating the acquisition price and other key terms.
We manage all regulatory filings and work with the Reserve Bank of India to secure the necessary approvals. Our expertise ensures that this critical step is completed efficiently.
Once all approvals are obtained, we oversee the formal acquisition process, ensuring the transition is smooth.
After the acquisition, we assist with the integration of the NBFC into your existing operations, ensuring business continuity and regulatory compliance.
What is NBFC Takeover
What Are the Advantages of Taking Over an NBFC?
The following is the need for NBFC Takeover:-
- Mergers and acquisitions are common in the global business sector.
- These talks and stipulations influence NBFCs, which are being viewed as an addition to the concerned bank.
- The Reserve Bank of India has established a framework for NBFC takeovers. The purchase of NBFC by another firm is referred to as an acquisition.
- Only registered NBFCs are allowed to assume control of other NBFCs.
What are the Negative Consequences of an NBFC Takeover?
NBFC Takeover provides advantages for both the acquirer and the target company. The following are the details:
- Target’s earnings have increased.
- The level of competitiveness has decreased.
- Increased revenue production or sales.
- Scale economies are a type of economy that occurs when many people work
- A distribution network’s expansion.
- Mergers and acquisitions are common in the global business sector.
- These talks and stipulations influence NBFCs, which are being viewed as an addition to the concerned bank.
- The Reserve Bank of India has established a framework for NBFC takeovers. The purchase of NBFC by another firm is referred to as an acquisition.
- Only registered NBFCs are allowed to assume control of other NBFCs.
NBFC Takeover provides advantages for both the acquirer and the target company. The following are the details:
- Target’s earnings have increased.
- The level of competitiveness has decreased.
- Increased revenue production or sales.
- Scale economies are a type of economy that occurs when many people work
- A distribution network’s expansion.
What documentation is required for an NBFC takeover?
To Takeover any existing NBFC, permission from the Reserve Bank of India is required. The following are the documents that are necessary for the Takeover:
- Material of the potential shareholders’ sources of funds, which are needed for the acquisition of NBFC shares;
- Information on the proposed Board of directors or shareholders;
- Every proposed director or shareholder must sign a declaration saying that they are not affiliated with any entity that the RBI has denied;
- A statement from each potential director or shareholder stating that they are not affiliated with any entity that accepts deposits.
- Furthermore, all proposed shareholders or directors must provide a report under section 138 of the Negotiable Instruments Act qualifying their non-criminal and non-convicting backgrounds.
- All submitted directors/shareholders’ bankers’ reports.
Why Choose NBFC Advisory for Your NBFC Takeover?
With over a decade of experience in NBFC advisory, financial services, and regulatory compliance, we provide a one-stop solution for businesses looking to expand through NBFC acquisition. Here’s why clients choose us:
Proven Track Record :
We’ve successfully managed NBFC takeovers across multiple industries, ensuring compliance and a smooth transition every time.
Industry Expertise :
Our team of financial, legal, and regulatory experts brings unparalleled knowledge to every transaction.
Customized Solutions :
We understand that every business is different, which is why we offer tailored takeover solutions to meet your unique objectives.
End-to-End Support :
JFrom initial consultation to post-acquisition integration, we guide you through every stage of the NBFC takeover process.
Client-Centric Approach :
We pride ourselves on building long-term partnerships with our clients. Your success is our priority.
Client Success Stories
Why is it required to obtain RBI approval before an NBFC Takeover?
As per the regulatory framework, to take over an NBFC, you must first obtain NOC from RBI for Changing in Control/ Management in Target NBFC in case the change in shareholding is more than 26% and change in management is more than 30%.
The Reserve Bank of India's prior consent must be obtained under the following conditions:
- NBFC management may or may not change due to any buyout or acquisition of control.
- Furthermore, any change in shareholding that results in a 26 per cent acquisition or transfer of NBFCs’ paid-up capital, with any incremental increases over time;
- Any change in management requires the approval of more than 30% of the Board of directors, excluding the NBFC’s independent directors.
In what circumstances does the RBI's prior permission for an NBFC takeover not apply?
There are several circumstances in which you do not require the RBI’s prior approval-
- If there is a change of 26% in the company’s share capital due to share buybacks or a decrease in the money with the consent of a competent Court.
- Alternatively, if the administration changes by 30% due to a change in the Autonomous Directors or a rotation of the directors on the Board.
Follow these steps after you've received RBI approval:
Publicise the Notice to the Public
The first thing you should do is post the Public Notice in two different regional languages. One should be English, and the other should be a vernacular tongue. After the RBI approves the notification, make sure to disseminate it.
Formalise your agreement
The next step is to reach a formal agreement with the target firm to purchase shares, transfer management, transfer shares, or other interests in the NBFC Takeover.
Publication of the Second Notice to the Public
It’s time to post a second public notice when your organisation will complete 30 days after getting into the specified agreement. The notification must also be written in two regional languages, one in English and the other in a vernacular language.
What is the procedure for changing a company's name while the NBFC takeover is in progress?
The acquirer company must get a name availability certificate from the Ministry of Corporate Affairs to change the company’s name. The acquirer must then contact RBI for a NOD or Notice of Default. Once the NOD has been obtained, the company can move forward with the name change.
Get started on your NBFC Takeover right now!!
FAQs
Any change in an NBFC’s shares of more than 26% or a change in management of more than 30%, or both, shall be regarded a takeover of the NBFC.
You must keep a minimum current assets level of INR 2 Cr, which may be informed of client loans or bank balances.
NOD must acquire RBI’s permission before changing management, transferring shares, or selling an NBFC.
Paid-up share capital + profit + reserves and surplus + share premium balance + additional free reserves –direct or indirect involvement in a group firm –accumulated loss – provision for non-performing assets (NPA) – expenditures that have been postponed -Investments in other NBFCs’ shares – investments in group firms’ shares, bonds, or debentures in excess of ten percent of NOF.
To seek for an NBFC licence, you must have a minimum fixed deposit of Rs. 2 crore, according to RBI. This is also known as net owned fund or starting capital. After receiving RBI approval for an NBFC licence, you can use the funds from your fixed deposit to lend or engage in any other pre-approved business activity.
The entire process, from target identification to RBI approval and final acquisition, typically takes between 4 to 6 months. However, timelines may vary based on the complexity of the acquisition and regulatory processes.
Costs depend on the size, type, and financial health of the NBFC being acquired. Reach out to us for a personalized quote based on your specific requirements.
Yes, foreign companies can acquire NBFCs in India, but the process involves additional regulatory scrutiny and approvals from the RBI. Our team can guide you through the requirements for foreign investors.
After the acquisition, we assist with post-acquisition integration, including management changes, regulatory compliance updates, and aligning the NBFC’s operations with your overall business strategy.
To change your name, you must first receive a name availability certificate from the MCA, and then apply for a NOD from the RBI. Once you have received NOD, you can begin the process of changing your name.
Yes. You must submit your income tax returns for the last three years to the RBI.
Yes. You must have a CIBIL score of 700 or above, and you must have had no disputes or loan write-offs with banks or NBFCs in the previous 24 months.
A Private Limited Company Registration certificate provided by the company’s registrar is valid for the duration of the company’s existence.
