Appeal Against NBFC License Cancellation

Appeal against NBFC License cancellation

What is NBFC License Cancellation?

The reserve bank of India is empowered by the RBI Act to the cancel the NBFC granted to a company, who shall not meet the public interest at large. In 2018 more than 3000+ NBFC License has been canceled by the RBI due not meeting the minimum net owned fund of Rs 2 Cr.

What are the circumstances in which NBFC License can be canceled?

  • Failed to re-pay the deposits
  • Have failed to meet the Minimum net owned fund of Rs 2 Cr by 31-03-2017
  • The Operation of NBFC is likely not in the interest of Public at Large
  • Have willfully violated the Provisions of the Act.
  • Have not filled the require Annual / Quarterly returns to RBI
  • failed to Apply for C-KYC, and Membership of CIC
  • Ignorance with prohibitory orders of RBI
  • Not Carrying NBFC Activity or working on papers with No Actual borrowers

What is circumstanced whereas Write petition should be referred to High Court?

  • When Net owned fund of Rs 2 Cr has been full filled after 31-03-2017 but before 31-03-2018
  • An opportunity of being heard has not been given to the company
  • Show cause notice issued by the RBI and reply on time seeking extension has submitted well on time

Where to file Appeal against cancellation of NBFC License?

  • An Appeal under sub-section (7) of Section 45-IA of the Reserve Bank of India Act, 1934 may be filled before the Appellate authority “Department of financial services “ (Time limit to file an appeal is 30 days from the receipt of order)
  • Write Petition Article under 226 can be filled before the high courts 

6 Steps to follow before preparing for Appeal against NBFC License Cancellation

  • Double check your ROC Compliance
  • Check your RBI Returns (NBS-9)
  • Tax Audit Reports
  • Quality test of Assets and Liability
  • Minimum NOF of Rs 2 Cr
  • Adequate reason for

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