Regarding formation of a consumer finance company
This query is : Resolved
14 September 2014
I WANT TO FORM A PVT. LTD OR FIRM WHOSE OBJECT IS TO FINANCE CONSUMER GOODS.
WHETHER NBFC PROVISIONS WILL BE APPLICABLE.IF YES THEN, ANY ALTERNATIVE SOLUTIONS TO BYPASS NBFC NORMS/PROVNS
KINDLY HELP
WHETHER NBFC PROVISIONS WILL BE APPLICABLE.IF YES THEN, ANY ALTERNATIVE SOLUTIONS TO BYPASS NBFC NORMS/PROVNS
KINDLY HELP
15 September 2014
NBFC provisions will apply. please aim at compliance instead of evasion
Message likes :
1 times
17 September 2014
we dont want to evade sirji...but is there any legal way to bypass it
20 July 2025
Regarding your question on forming a Pvt. Ltd. company or firm for financing consumer goods and whether NBFC provisions will apply:
Will NBFC provisions apply?
Yes. If your primary business involves financing consumer goods, loans, or credit, your company will likely fall under the definition of an NBFC (Non-Banking Financial Company) as per RBI regulations.
NBFC regulations will apply if your financial activities meet the criteria set by RBI (e.g., accepting deposits, lending money, etc.).
Is there a legal way to bypass NBFC registration and norms?
Generally, no. If you are engaged in financial activities like lending or hire purchase financing, you must comply with NBFC registration and regulatory requirements.
Attempting to bypass NBFC norms by structuring the business differently can lead to legal complications, penalties, or business risks.
Possible alternatives:
Partner with an NBFC or bank: Instead of directly financing, act as a broker or referral agent to NBFCs/banks.
Operate purely as a trading company: Sell goods on outright sale basis without financing or credit facility.
Limit financial activities: Avoid accepting deposits or providing credit for consumer goods, so the company is not categorized as NBFC.
Microfinance / small loans: If targeting microfinance, different registration rules may apply, but still regulated.
Summary:
If you plan to finance consumer goods through loans or credit, you will have to comply with NBFC regulations.
Instead of seeking ways to bypass, it’s better to design the business model in compliance with RBI and legal norms.
Will NBFC provisions apply?
Yes. If your primary business involves financing consumer goods, loans, or credit, your company will likely fall under the definition of an NBFC (Non-Banking Financial Company) as per RBI regulations.
NBFC regulations will apply if your financial activities meet the criteria set by RBI (e.g., accepting deposits, lending money, etc.).
Is there a legal way to bypass NBFC registration and norms?
Generally, no. If you are engaged in financial activities like lending or hire purchase financing, you must comply with NBFC registration and regulatory requirements.
Attempting to bypass NBFC norms by structuring the business differently can lead to legal complications, penalties, or business risks.
Possible alternatives:
Partner with an NBFC or bank: Instead of directly financing, act as a broker or referral agent to NBFCs/banks.
Operate purely as a trading company: Sell goods on outright sale basis without financing or credit facility.
Limit financial activities: Avoid accepting deposits or providing credit for consumer goods, so the company is not categorized as NBFC.
Microfinance / small loans: If targeting microfinance, different registration rules may apply, but still regulated.
Summary:
If you plan to finance consumer goods through loans or credit, you will have to comply with NBFC regulations.
Instead of seeking ways to bypass, it’s better to design the business model in compliance with RBI and legal norms.
You need to be the querist or approved CAclub expert to take part in this query .
Click here to login now
Click here to login now
Similar Resolved Queries
Unanswered Queries
- Households luggage
- Selecting Tax Regime while for calculating tax relief on under Section89 of income tax act 1961.
- Cloud service
- CSR Impact Assessment
- Sale of Gold ornaments
- GST ON FOREIGN CLIENT
- Capital contribution of Land into SPV for Specific project attracts Income Tax & why ?
- Regarding Change in Signature before applying for membership
- SECTION 194T
- GST on Fresh Juice Center(Sugarcane)
- GST ITC on Liquidated damages
- SALE OF GOODS FROM OTHER STATE
- Regarding change in correspondence address in SSP portal
- Regarding Advance Tax not claimed in the Return of Income for A.Y. 2025-26
- No Compliences after incorporation
- USEFUL LIFE OF USED/SECOND HAND COMMERCIAL VEHICLES
- Claiming TDS deducted by builder on Hardship compensation and Corpus
- Address Change to another state of a Registered Trust with 12AB approval
- Updated return in budget 2026
- Clarification Required on GST Rate & HSN Classification – Millet-Based Probiotic Drink
Trending Online Classes
-
DT & Audit (Exam Oriented Fastrack Batch) - For May 26 Exams and onwards Full English
CA Bhanwar Borana & CA Shubham Keswani -
IDT LIVE Exam Oriented Batch | May 2026, Sept 2026 & Jan 2027
CA Arpita Tulsyan
CAclubindia
