Starting a Finance Company in India – a 101 From 3E Accounting
Are you starting a finance company in India? Here’s a quick read to get your business start-up right the first time around.
Starting a finance company in India is a brilliant business idea. India has a competitive market for such businesses, driven by a substantial rural population without easy access to banks.
However, getting started in this line of business is no easy matter as getting approval and licenses can be an uphill task. Hence, getting it done right the first time around is key to making a success story of your venture.
Understanding Finance Companies in India
Finance companies in India are known as Non-Banking Finance Corporation (NBFCs) under the RBI or Reserve Bank of India Act. Incorporated under the Companies Act 2013, finance companies get their licence from the RBI and must have as their financial activity:
- Loans and advances
- Acquisition of stocks, equities and debts
NBFCs are informal channels that offer short-term, small or start-up loans to individuals and businesses. They cover asset finance, investment and loan, microfinance, housing and infrastructure, and mortgage guarantee companies. In India these include:
- Credit Cooperatives such as Trusts
- Nidhi Companies
- Local Finance License
- Producer Companies
- Micro Finance via Section 8
The most popular option for a finance company in India right now is FinTech or Financial Technology Business. As opposed to traditional brick-and-mortar companies, FinTech Companies offer the added benefits of online financial services.
FinTech companies in India offer:
- Online financial access and resource
- Financial management services to individuals and corporations
- Financial aid and planning
To get started, you need to decide what kind of FinTech company you want. These include:
- OPC – One Person Company: sole ownership but functions as a company
- LLP – Limited Liability Partnership: a partnership and corporation combination with liability limited to respective shares
- PLC – Private Limited Company: liability lies entirely with the company
The next step is to register for GST and obtain a GSTIN for your chosen type of business. It is also essential to get all legal documentation drafted and submitted as well as registering your Intellectual Property Rights (IPR).
Licensing depends on the kind of services you wish to provide. They include For Payment Service; For P2P; For Retail Service Providers; For Financial Management / Investment. Each has its own set of rules, requirements and regulations. Hiring a reliable company like 3E Accounting will ensure that the proper procedures are followed.
Finally, you will need to register your domain as having a web presence is central to any FinTech business. Good website design and development are top priorities.
Taking the Right Step
Hence, both thorough planning, as well as expert guidance, are needed in any start-up. Whether its legalities or web design and development, partnering with the right industry professionals can make a difference.
3E Accounting is the ideal partners as they are like the Swiss army knife of business – everything you need in one neat package. Leave the formalities, procedures and designs in the hands of the experts when starting a finance company in India.
Contact 3E Accounting today to get a head start on setting up your finance company.