Category: Registration

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A Holistic Take on Prepaid Payment Wallet License in India

prepaid wallet license india

Introduction

The prepaid payment wallets are also known as PPIs and they happen to be the instruments having fiscal worth against which the goods and services can be bought and funds can also be transferred. The monetary worth injected into the prepaid payment wallets turns out to be the sum that the holder has paid towards it either via cash or debit to a bank account or credit card. The prepaid payment wallets have become very well-known for the last few years as they can be used with ease in other manners for transactions. The transactions performed by them are clear, responsible, and easy to use. The prepaid payment wallets can also be called e-wallets. For the assessing and the permitting the transactions between the various prepaid payment instruments, the Reserve Bank of India has given certain recommendations.

The prepaid mechanisms can be issued in these forms:

Smart Cards

Internet Accounts

Internet Wallets

Wallet Accounts

Magnetic Strip Cards

Paper Vouchers

And any other thing that can be utilized to obtain the prepaid amount

TYPES OF PREPAID PAYMENT INSTRUMENTS

Closed Wallet or Closed Prepaid Payment Instrument –

These are the types of PPIs that are issued to its consumers by a company specifically for the purpose of purchasing goods solely of that company. This kind of PPI can be utilized for buying goods and services of that particular company which has issued it. For example – Reliance Supermarkets, etc.

Semi Closed wallet or Semi Closed Prepaid Payment Instrument –

With regard to this type of the prepaid payment instruments in which the holder

Semi Open Wallet or Semi Open Prepaid Payment Instrument –

These instruments are to be used by the holders for purchasing goods and services at merchant spots accepting cards. Cash withdrawal and redemption are not possible with such kinds of instruments.

Open Wallets –

These happen to be the prepaid payment mechanisms used to obtain goods and services at anywhere and the holders have the rights to withdraw cash from ATMs.

Cross Border Transactions –

As per the guidelines of the RBI the prepaid payment wallets do not apply to individuals who have the approval to issue the Foreign Exchange denominated prepaid payment instruments, in sync with the provisions of Foreign Exchange and Management Act. The transaction limit for cross border transactions is kept at INR 5,000.

ADVANTAGES OF E-PAYMENT WALLET

1. It is a secure mode of payment.

2. It can save time as all the bills regarding telephone, electricity, mobile etc. can be paid online.

3. It gives access for online deals from anywhere and any time.

4. These are fiscal transactions that are transparent and responsible to the issuer of e-wallet.

SUITABILITY ASPECTS FOR ISSUING PREPAID PAYMENT INSTRUMENTS

The Banks and the NBFCs can issue prepaid payment instruments only once after getting approval from the Reserve Bank of India

The entities apart from banks or NBFCs should have at least confirmed total worth of Rs. Fifteen crores, according to its last audited balance sheet.

For seeking approval, these entities need to make an application to the Reserve Bank of India.

A newly incorporated company has to submit a certificate regarding the present net worth along with its temporary balance sheet from its Chartered Accountant.

if any entity other than Banks and NBFCs is having the license for providing prepaid payment instrument prior to the Reserve Bank of India making it essential to have total worth of INR fifteen crores, such entity will have no option but to hike its net-worth legitimately to this limit before the end of September, 2020.

It is essential for the entity to be registered under the Company Act, 2013 or the Companies Act, 1956 to obtain the license from the RBI.

It is pertinent that the activity to function as a prepaid payment instrument the issuer is specified in the Object Clause of the Memorandum of Association of the company.

FACTORS SURROUNDING CAPITAL FOR ISSUE OF PREPAID PAYMENT INSTRUMENTS

While calculating the net worth of a company, the following things have to be a part of the net worth:

The Paid-up equity share capital

The Free Reserves

The Preference shares

The Share Premium Account

The Capital Reserves representing surplus

DOCUMENTS REQUIRED FOR GETTING THE PREPAID WALLET LICENSE

The Name of the entity

The Address Proof of entity’s registered office

The Constitution of the entity

The Entity’s certificate of incorporation

The chief business of the entity

The Information of the management

The Particular of Statutory Auditor of the entity

The latest authorized balance sheet of the company

The Names and Addresses of the Bankers of the Company

Any other crucial documents that may be required from time to time.

THE APPROVAL METHOD FOR APPLICATIONS GIVEN BY NON-BANKING ENTITIES

Step 1: A non-banking entity wanting the approval of RBI has to make an application in Form A according to the Regulation 3(2) of the Payment and Settlement System Regulations, 2008.

Step 2: The RBI will consider the suitability of the entity during the screening process.

Step 3: Post the eligibility, it is evaluated whether the company is sound financially and the assessment of the management of the company is performed for which opinion from regulators, government authorities, etc. is taken.

Step 4: Following this the applicant is examined on other factors that includes the potency of its customer service, overall capability, technical proficiency and other related requirements.

Step 5: If the company fails the suitability criteria, then the application will be rejected. The fee given by the company during the making of application shall not be refunded.

Step 6: If every essential condition is met by the company, it will be given the in-principle nod by the Reserve Bank of India, which shall be important for six months.

During the six months of the in-principle approval, the entity has to submit a proper System Audit Report. If the company is unable to furnish this report, its in-principle nod will automatically fade away.

Step 7: Post the approval, the company gets a Certificate of Authorization, which would remain in force for five years from the day it has been given a nod.

If the certificate of authorization has to be renewed, an application needs to be put in to the RBI three months before the expiry of the certificate. If there happens to be a problem in giving the application promptly, then the RBI reserves the rights to accept or reject the application of renewal.

Step 8: If an entity obtains the final approval, then it has to initiate its business operations within six months of obtaining the nod. If it cannot, then the approval will peter out.

However, a one time extra duration of six months is availed from the RBI by giving a written request beforehand mentioning a convincing reason obstructing the launch of business operations. The RBI has the right to accept or reject such requests for providing additional time.

Step 9: Those issuing prepaid payment instruments must document all the dealings undertaken via Prepaid Payment Instruments for a minimum of ten years. According to the suggestion of the RBI, this data has to be given either to the RBI or any other agencies, as required. The issuers of prepaid payment instruments also need to file Suspicious Transaction Reports (STRs) to FIU-IND (Financial Intelligence Unit-India).

EXTRA CONSENT REQUIRED BY THE NON-BANKING COMPANIES

If a non-banking company is given the Certificate of Authorization for providing prepaid payment instruments, then a written approval is needed of the RBI in following conditions:

If there has been any takeover or acquirement of authority of the company and the same has effected any change in management or not;

If due to an alteration in the management there has been a change in thirty percent directors of the company, excluding the independent directors. But beforehand written consent of the RBI will not be required for those directors re-elected on retirement via alternation.

LEGALITY OF THE PREPAID WALLET LICENSE

The prepaid payment instruments license is valid for at least one year from the day it is issued to the concerned holder. The PPI issuer is duty-bound to inform the holders regarding the expiry of the PPIs through either SMS or e-mail or post or any other means inside a reasonable time duration. The intimation pertaining to the expiry of the PPI has to be made in the holder’s chosen language as specified by him or her at the time of obtaining the PPI. In case the PPI lapses and the holder does not provide a renewal application for a new PPI, he or she can get a grace period of sixty days.

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Chief attributes regarding the amended Essential Commodities Act

Chief attributes regarding the amended Essential Commodities Act

The Essential Commodities Act got amended by the Government of India in September 2020. The amendment in question took down the Essential Commodities Ordinance, 2020 (EC Ordinance) enacted in June 2020. The EC ordinance was initiated for the purpose of effecting certain changes in the Essential Commodities Act, 1955. The amendment pertaining to September 2020 has done away with the EC ordinance brought out in June. This write up strives to highlight crucial attributes regarding this amendment.

What is the meaning of Essential Commodities?

According to the dictionary, an essential commodity happens to be a need that is vital for any kind of a living being. This would be normal food grains and other kinds of supplements which can be an essential aspect of the lives of individuals.

As per the Essential Commodities Act, 1955, a clear definition for Essential Commodity is missing. But, Section 2(A) of the Act explains essential commodities as “a kind of item included under the list of the Schedule which is mentioned under the Act”. This is merely a usual meaning of essential commodity.

Also, the government wields the authority to enhance or reduce the list of essential commodities under this Act.

Items in the list of essential commodities

Any kind of medical equipment or drugs.

Food items for day to day intake like any kind of edible oil.

Fertilizers (both liquid and solid) – These could be organic or inorganic.

Cotton Yarn or any other hank yarn.

Petroleum-Based Products.

Textiles such as Raw Jute and Other Products.

Cattle Food.

Seeds of Fruits, Vegetables and other forms of edible plants.

Face Masks.

Hand- Sanitizers.

The afore-mentioned list contains several forms of essential commodities. Face Masks and Sanitizers also got added in the list from 13 March 2020, due to the surge of Coronavirus across the country. In the above list, the government has got the right to control and regulate the supply of all the items. Control implies that the government can also add or exclude any items in the list of EC.

The bill repealed by the Amendment?

Big modifications were made in the September amendment in the EC bill pertaining to the essential commodities act. It took down the Essential Commodities Ordinance 2020 brought on in June. Diverse views are circulating regarding the changes effected by the amendment.

Features of the Amendment to the Bill

The present amendment transformed the function of the Essential Communities Act 1955. This has a wholesome backing as it benefits farmer’s right to livelihood. This apart, farmers can also sell directly to private companies.

The government reserves the right to cap stock holding on essential commodities. The stock-Holding limit pertains to the extent of control the government has over the commodities. According to the amendment, stock holding ceiling on essential commodities is possible only during extreme circumstances. These circumstances are the Act of God, natural calamities, war, external aggression, famine, and other circumstances.

The government has the right to regulate commodities such as pulses, cereals, potatoes, and onion and edible items during the above-mentioned circumstances. This amendment exists under section 1A of the amendment bill.

The government has the right to implement any kind of ceiling only if the following obligations are met:

In case of a 100% price surge in agricultural or horticulture produce. This price rise has to be in the retail price of the agricultural or horticulture produce.

In case of a 50% spike in the retail rate of non-perishable agricultural produces.

This kind of imposition will be arrived at on the basis of the price of the agriculture or horticulture produces in the existing 12 months or the average retail price being charged. The lower of the above value will be considered.

The ordinance is not valid for any processor, or any kind of value chain participant of the agriculture or horticulture produce. For this, the stock held by a person or a company should not be over:

The entire processing ability of the installed system; or

Demand for the exporter in the event of any kind of exports.

Value chain participant happens to be any kind of individual or entity involved in enhancing value to the agricultural production chain. This participant could be in any level of the process, including storage, production, packaging, transport, and distribution to the agricultural produce.

The features of this ordinance are not applicable to any kind of government order pertaining to the public distribution system or any form of the target public distribution systems. Under these systems, the government disburses pulses and food grains at subsidized rates to certain people.

Does this amendment hold any merits?

  • Several experts have clarified that his amendment can be good going forward.
  • Farmers can deal with companies and other private organizations devoid of any intermediaries for the purpose of selling agricultural produce.
  • The livelihood of farmers would go up in the future.
  • Farmers do not require any middlemen for using this system.
  • Overall farmer’s income will intensify as the products created by farmers can be sold anywhere. This will not just be applicable in any local mandi or Kirana stores.
  • Large organizations would put in money in villages by dealing with farmers directly, thus augmenting their revenue.

Demerits pertaining to the Amendment

Many have hailed the amendment, but there have been many criticisms as well.

With private organizations dealing with produce, hoarding will intensify. Prior to the amendment, hoarding wasn’t permitted. But, this amendment can result in indirect hoarding also. These amendments take away the states’ rights to create rules on Essential Commodities, because this amendment was enacted across the nation.

Goods’ prices under the Essential Commodities act may go up if large procurement orders are performed by various organizations. This will permit the government to control the products under the amendment via the ‘exceptional circumstances’ clause in the bill.

Hoarding can also hike the rates of essential commodities such as onion and potato, which is quite common in the kitchens of Indian households.

Conclusion

The government effected a change in the essential commodities act, 1955. The amendment regarding the bill abandoned the EC (Ordinance), 2020 brought out by the government to control commodities. Having said that, the amendment permitted the government only to regulate the stock holding limit regarding essential commodities under extreme circumstances. Yet, this amendment can benefit the farmers. Farmers would be able to transact with organisations directly. This can boost their revenues from agricultural produce. But, the amendment could increase the prospect of hoarding. So, it can be safely surmised that the amendment has both positive and negative aspects.

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Start a business instantly with your Aadhaar Card

Start a business instantly with your Aadhaar Card

It is no child’s play to start a business. You are always in a dilemma whether to take the legal way or not. But, the Modi government has come up with a fresh proposal after which, you will run out of excuses to begin a business. This initiative is known as Udyam registration.

“All you need is the Aadhaar card” goes the new slogan for entrepreneurs seeking to start a business. This write up will focus on the new initiative and reason for government to take this step.

The new declaration

Come July 1, the MSME registration method will be totally paperless and on the basis of self-declaration. According to the MSME notification, sole document needed to register your company would be Aadhar number. As part of the minimalist process, the government wants a sole window system across India.

Reason to initiate the process

MSMEs encountered a lot of issues while uploading documents. “The requisite documents are too many and the time required is less. I could hardly find time to receive Udyog Aadhar registration” – said Rahul Bharagava, partner at a small tech-firm.

According to the government, Udyam registration is purely paperless and it could be a boon for those grappling with bureaucratic Red-tapism.

Other objectives of starting the move:

Spotting the beneficiaries of several schemes launched by the government due to COVID-19 pandemic.

Saving time and money for small businesses.

What to expect from Udyam registration?

Udyam registration will give you the following:

An Udyam registration certificate.

An embedded QR code with which info about the new enterprises can be obtained.

For MSMEs with Udyog Aadhar registration, they should get Udyam registration so as to be governed by a unified code of conduct. In case an MSME is occupied with several or manufacturing services, they need to put them under one MSME but there will be no multiple registrations.

Conclusion

At present when everyone is going digital, it’s time to abolish paper work. In case you have an MSME or need to register as one, Udyam registration facilitates a paperless environment. If you need more info about Udyam registration, then get in touch with our experts.

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Options before telecom to furnish guarantees for clearing AGR dues

dot osp registration

Introduction

The issue of Adjusted Gross Revenue (AGR) is literally giving sleepless nights to some of the telecom majors. The matter has generated enough heat in India with some like Vodafone threatening to quit its operations in the country. However, things are finally showing semblance of normalcy with some flexibility being given to telecom operators with regard to AGR. The Telecom majors such as Vodafone-Idea and Bharti Airtel have plans to provide license, spectrum, tangible net assets and tax refunds as security to assure the honoring of AGR dues.

The problem persists

As part of the hearing process with regard to the AGR a week before, the Supreme Court has stringently sought a reply from the telecom operators, regarding the roadmap, timeline and security related to the AGR payment. This was part of the response regarding the plea that the Department of Telecommunication or DOT filed, permitting telecom players to pay the AGR dues in a flexible way over the next 20 years. However, the apex court was of the view that staggered payment can only happen if there is a clarity over schedule or security on the part of the telecom players. According to a reliable source, “Telecom operators are presently evaluating the net worth of their tangible assets. This is very critical in getting clarity over the security aspect the Supreme Court had sought from them.” But the woes regarding the AGR are only exacerbating despite having a clear idea with regard to the way forward concerning the AGR dues. The problem began when the National Company Law Appellate Tribunal accepted spectrum within the ambit of asset in a hearing, but the Department of telecommunication disagreed with it. So, the whole matter of whether spectrum qualifies as assets lies with the Supreme Court.

Security clearance through assets sans spectrum

For the telecom major duo, Vodafone Idea and Bharati Airtel, the privilege of the tax refunds is there and the same amounts to INR 35,000 Crore. Also, there is a provision of some funds from the pending public sector units and the same comes to INR 20 thousand Crore. With such sources of revenue, the two telecom operators can breathe a little easy regarding the issue of AGR.

Guarantee is proving to be a thorn in the flesh for telecos

Despite Supreme Court asking the telecom players to furnish guarantee acting on the plea of DoT, things don’t look very promising for the telecom operators. According to a source, “ the banks have already been stretched a lot by the telecom operators that providing more guarantee would be out of the question. Also,there exists another problem wherein one has to furnish the security of 70%-90% of the loan dues to obtain the loan amount. This is very much impossible considering the situation that the pandemic had on the businesses and economy as a whole. This prompted Vodafone-Idea to say that it can’t provide a guarantee.

Finally,

The signs are not too favourable for telecom companies with regard to the AGR with an obstinate Department of Telecommunication breathing down their necks. As of now, the situations the telcos are in turn out to be a bit ominous as they are looking at projecting spectrum, license and tax refunds as guarantees related to AGR. It is very difficult to pin the blame on anyone for this matter. In reality, it is the DoT that grants the telecom operators the OSP License. So, it is in the best interest of telecom players to file the tax returns appropriately and on time. In case, the telecom businesses find the task to challenging then they should take the help of tax experts. Had these operators filed the returns properly things would not have reached this stage. This proves that filing tax returns is important otherwise a headache like AGR would always crop up to take away your peace and happiness.

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LIMITED LIABILITY PARTNERSHIP COMPANY [LLP] FORMATION IN INDIA

LIMITED LIABILITY PARTNERSHIP COMPANY [LLP]

The LLP stands for limited liability partnership which can be defined as a corporate entity registered under the limited liability partnership act ,2008.

It can also be defined as a hybrid form of partnership that enjoys limited liabilities and also includes features of a company.One should note that the compliances for a company are applicable to limited liability partnership.

  • BUSINESS WHERE LLP NEED APPROVAL FOR REGULATORY AUTHORITIES –

There are certain business activities where the limited liability partnership companies need prior authority of regulatory authorities before the beginning and usch business activities are venture capital ,banking , stock exchange ,merchant banking ,architecture , chit fund ,reconstruction , NBFC ,mutual fund etc.

All the activities marked above need the prior approval for concerned authorities and bodies before starting the business as per terms and conditions of the companies act ,2013.

  • FOREIGNER CAN BECOME A PARTNER IN LLP –

According to new companies act ,2013 , the foreigner can also become a partner in the limited liability company keeping in mind that there should be at least one member or partner in the company who is an indian citizen and resident of India in the previous calendar year.

  • CONVERSION OF PARTNERSHIP FIRM INTO LLP –

A partnership firm can be easily converted into the limited liability partnership firm according to rules defined below –

A form 17 is needed to be filed along with the form 2 for the conversion of the partnership firm into the limited liability partnership company.

One should note that an existing partnership firm by complying with the provisions of clause 58 and schedule 2 of Limited liability partnership act can be easily converted into a limited liability partnership company.

  • MINIMUM PARTNERS REQUIRED TO FORM LLP –

As per the Limited Liability Partnership act,2008, The minimum partners required to incorporate a limited liability partnership firm is two and there is no limit for the maximum number of partners.

  • A FOREIGN LLP CAN ESTABLISH BUSINESS IN INDIA –

According to the new companies act,2013 a foreign limited liability partnership company can easily establish a business in India.The process involves filing of form 27 with the ROC.

The form includes various details such as foreign LLP incorporation , two authorized representatives ,designated partners for compliances under the act.

  • ADVANTAGES OF FORMING LIMITED LIABILITY PARTNERSHIP COMPANY –

The advantages of forming limited liability partnership companies are defined below –

1] FEATURES OF PARTNERSHIP AND COMPANIES –

The basic and foremost advantage is that LLP includes features of both partnership firm as well as the company.Therefore both the types of feature are available here.

2] INCORPORATION COST INVOLVED –

  The cost involved in the incorporation of the limited liability partnership company is very low.

3] MINIMUM TWO AND MAXIMUM PARTNERS EXEMPT –

 In LLP there is no limit for the maximum number of the partners and minimum required partners for the incorporation is two.

4] AUDIT NOT MANDATORY –

 There is no mandatory audit to be done in LLP unless the turnover exceeds Rs. 40 lac. And the capital contribution exceeds rs.25 lac.

5]MAINTAIN ONLY ACCOUNT BOOKS-

 There are very few records to be maintained i,e only the books of account are needed to be maintained.

6] LIMITED LIABILITY OF PARTNERS –

 In the case of LLP , the partners’ liability is limited to his shares and therefore the personal assets of  every partner is safe and secured.

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Decoding the benefits of registering a Business

Decoding the benefits of registering a Business

There are lots of benefits which are there of registering a business in India and they are as follows-

  1. It gives you a structure- By forming a new company, it gives you a better structure of business, like suppose if you want to open a one man company then you can go for One person company formation, or if there are Partners in your company then you must opt for a Partnership Firm and by forming a company, it helps in smoothly running of a firm.
  2. Without structure there is no order in the company and therefore it affects the profit margin of the company. Therefore when we talk about business then we must focus on how must give a properly organized structure to your business idea.
  3. By opting for a registration of company, it gives a separate entity to your business, as you get certificate of incorporation which can be called as a Birth Certificate of your newly formed company.
  4. There is perpetual existence of a company, like when we open a startup , then everyone one only wants to make money but also they want to establish a legacy. When a business is registered it gives a separate entity. If and when the owner of the business dies the business can continue to exist. Its ownership can be transferred to another Director, or it can lie dormant.
  5. Registered business are more trustworthy, basically unregistered business is worthless as before doing any business, anyone wants to have safe business and they do not want to lose in their services, therefore registered business are termed as more understandable as compared to the unregistered one.
  6. Limited liability partnership is probably the most overused terms when it comes to “ benefits of Business Registration”, however people are still fuzzy about its meaning. So Limited Liability means that a company is a separate legal entity and it has to bear its own losses.

Conclusion

When it comes to business registration, there are many but when we talk about its benefits, there we lack, I hope that through this blog we have enlightened you with the understanding of what the benefit actually means.

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What Is Trademark Rectification ?

What Is Trademark Rectification ?

What is Trademark Rectification?

Trademark rectification is needed when there is a need for any kind of alteration, change, modification or rectification in the registered mark or in the register of trademarks, or rectification of the trademark register by such aggrieved party.

Trademark rectification rights in India is governed by chapter VII of the trademark Act, 1999. Under section 57 of the Trademarks Act, any person who is aggrieved by the entry in the trademark register can file for trademark rectification before the registrar of trademarks. However, in certain cases consequences can be cancellation of trademark registration.

Who can file Trademark Rectification?

  1. It can be filed by the owner of the trademark itself, or
  2. It may also be filed by the party or entity being aggrieved by such entry.

Common grounds for filing Trademark rectification in India

  1. Due to latest knowledge or advancement
  2. Due to non-use of registered trademark for over 5 years by the registered owner.
  3. Due to non-renewal of the original or previous registration of the trademark.
  4. In cases where inclusion of addition of certain more classes of goods or services to the business gamut of the registered trademark.
  5. Conditions which are beyond any more grounds stipulated in section 9 and 11 of the Indian Trademark Act, 1999.
  6. The certain omission of any entry eg, a disclaimer, condition or limitation.
  7. Where the registration is obtained by misrepresentation of facts, similar to an earlier mark registered and lacks sufficient cause for registration.
  8. Cases where mark was wrongly remaining on the register and causing or likely to cause confusion.
  9. When the renewal fee has not been paid.

Procedure for Trademark Rectification In India

Procedure for Trademark rectification in India includes following hings-

In cases where trademark registry has marked the trademark application as Formality check or send back to EDP, therefore in this case option of rectification and of being is being given and it requires to be resubmitted. In such cases, rectification deed is required to be prepared to address all the concerns of the trademark examiner-

  • TM-O form is required to be filled in order to file trademark rectification.
  • Make sure that your trademark rectification application is a clear and crisp statement of grounds related to the application.
  • You must support your arguments with strong evidence to support rectification of the specified trademark.

We have immense and diversified experience in handling Trademark rectification cases and shall suggest more professional ways to avoid trademark rectification. 

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PEER TO PEER [P2P] LENDING LICENSE

peer to peer lending license

The Peer to Peer lending can be defined as a mode of business where a platform in digital form is provided to an individual or an entity for raising loans or fund at certain interest rates and is needed to be paid back as per the specified terms and conditions.The interest rates are either set by the lending organization or after mutual discussion between the borrower and lender etc.

In India ,the Peer to Peer[P2P] lending business has been extended to 5 billion dollar as per the reports being concerned.Therefore the entrepreneurs and startups business can easily avail loans from this platform without much documentation.

In such  lending there is no involvement of any financial institutions and banks and the lenders are free to choose the borrowers whichever they want to give loans. This form of lending money is getting very famous among investors as they get a higher rate of return through the Peer to Peer[ P2P] lending business.

The Peer to peer lending companies are being regulated through Reserve Bank of India [RBI]and therefore reserve bank of India reserves  power for providing lending license to the applicant.

  • TYPES OF PEER TO PEER LENDING MODEL –

There are namely 03 types of model being defined below ;

A] CONSUMER LENDING –

The consumer loans involve small personal loans taken by the individual for purchase of car , bike , marriage expenses , home repairs , Repayment of credit card etc.

B] SMALL BUSINESS [SME] LENDING –

The loans provided to small businesses for various purposes such as asset finance , working capital , business to be extended etc .

C] PROPERTY LENDING –

Under this lending ,the applicant borrows loan for purchase of property ,commercial ,refurbishing of house etc .

In india one needs to fulfil certain conditions in order apply for the peer to peer lending license-

1] A company should be registered 

2]The applicant shall have adequate amount of capital structure 

3] The applicant company shall have technological , managerial , 

4] A pure motive to serve the public and its interest 

5] a proper business layout and plan 

6] The board of directors shall fulfill all terms and conditions of RBI

  • PROCEDURE TO OBTAIN THE LENDING LICENSE –

Any company being registered as private or public limited company can apply for the license with the reserve bank of India.They need to fulfill the conditions below –

1] The applicant company must be registered as a private or public company under the eyes of law and have an objective of doing financial financing of money.

2] The Minimum net owned fund should be Rs.2 crore .

3] There should be efficient information technology system i.e mobile application for the workflow 

4] The online application form is available at the RBI website. 

5] The hard copy of the application together with required documents to be submitted to the office of the reserve bank of india.

6] After doing detailed and vigilant verification of the application and documents attached with it , the RBI provides the license certificate to the applicant company .

  • MERITS AND DEMERITS OF PEER TO PEER LENDING PLATFORM –

There are various merits and demerits of peer lending platform for both borrowers and lenders and these are highlighted below –

FOR BORROWERS :

A] MERITS –

1]  The first and foremost benefit is the amount of loan received is either at fixed rate of interest or low interest rate as compared to other financial institutions .

2] The documentation is very simple and easy as compared to documents required while taking loan from financial institutions 

3] The fees and other charges required are low as compared to banking institutions

B] DEMERITS – 

1] There is high use of information technology and there is a lack of security as documents can be leaked or information can be wrongly utilized.

2] The amount of loan provided is less as compared to the financial institutions.

FOR LENDERS :

A] MERITS –

1]  The return of the investor is higher as compared to the risk taken 

2] The investor is happier as he has diversification and more places available to invest his capital and earn more.

3] In peer to peer lending ,the lenders communicates with the borrower directly to finalize the deal

B] DEMERITS –

1]The risk factors involved here are higher and uncertain as compared to the banking financial institutions

2] The returns are lower in comparison to public traded index fund

3] The future possibilities are uncertain and unrealistic and it’s too early to make future opinions of this type of industry

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What Is Joint Venture ?

What Is Joint Venture ?

In today’s business World , every Organization  focuses on the expansion of its business and enhances its revenue in a small period of time . In such a scenario , Joint Venture agreement Plays an important Role .It can be defined as an agreement that includes two or more parties agreed on a common prospective with  better utilization of resources in order to achieve desired target or outcome.

There is a difference between joint venture and Merger as merger leads to transfer of ownership whereas in case of Joint venture there is no such case of ownership transfer.

Joint Venture can be classified in two types namely –

1]Equity Based Joint Venture – It can be defined as an agreement between the two companies to enter into a separate business venture together .Each partner participated in gains and losses according to the percentage equity ownership they have as per the agreement.

Equity joint venture is one of the best mediums  the best way in which a foreign company can establish its business in India and it is also fruitful for an indian company as it gets the required amount of investment and technology due to the venture.

Contractual Based Joint Venture – It can be defined as an agreement in which two parties come together for a particular business project and sign a contract with terms that define that  they will be together for that particular project only.

The franchise Business is a great example of Contractual Based Joint Venture that includes franchisee and franchise owner entering a joint venture for a specific project that has no resemblance to their individual work or business as it will carry on in a similar manner .

Checklist before entering into  Joint venture –

A] A Proper and deep research work to be done on the Business activities of other company

B] SWOT Analysis is mandatory to be done our business as it provides us important knowledge of our ongoing business in terms of strength , weakness , opportunities , threats of the company

C] One should also compare the working model and criteria of his company with the one you are going to be in venture agreement 

D]  A view of the management and its employees should always be taken into consideration

Process of Joint Venture 

1] The selection of an accurate and right partner is the first and most important step for having  a successful Joint venture . The culture and working module of a proposed partner should be similar with your organization or company.

2] The second step leads towards signing a memorandum of understanding {MOU}  that defines terms and conditions on the basis of which both parties are entering into the Joint venture agreement .Each and every point that defines the need of Joint venture is marked here.

3] Joint Venture Agreement and MOUs should always be drafted in the Presence  of Corporate law expertize.

4] All Details such as type of firm ,source of funding , stake of shareholders , contribution of intangible assets etc. should be mentioned in the joint venture agreement .It should also include the exit Strategy of the involved parties as they might try to dissolve the venture.

5]The next step is the selection of name for the Joint venture with the consent of both the parties 

6]After formulation of Agreement ,  the last and final step is to register the company and the articles of association.

Important Clauses to be mentioned in Joint venture Agreement –

There are some important clauses that should always be highlighted  in the Agreement are provided below –

1] The amount of capital being invested by the involved parties in the joint venture 

2] It should be mentioned how the profits, losses, liabilities to be distributed 

3] Mentioning the responsibilities and work of parties involved in the venture

4] Mediating mechanism and procedure to be followed in case any dispute may arise in future 

5] Proper data to be maintained of the new venture that include administrative and financial records

6] Exit Strategy should be mentioned in case both the involved parties are ready for dissolution of Joint venture.

Opportunities /Advantage of Having Joint Venture Agreement –

The joint venture Agreement provide various advantages  being highlighted below –

1] The new joint venture agreement provides opportunities to involved parties such as access to new resources in terms of technology , experience and talented staff , modern assets and equipment  , capital investment etc.

2] It also leads to a new client or customer acquisition  for involved parties which might not have been possible before being entered into agreement .

3] It also leads to sharing useful ideas , opinions , and information which will be beneficial in terms of growth and development of the new business.

4]  Due to two or more parties involved , It also enhances the workforce level and speed of production of the organization.

5] In case one of the companies  involved has a better reputation or goodwill in the market it will ultimately provide assistance to the other company to enhance its image and reputation in the market.

However it should be kept in mind that if Joint ventures are improperly planned  then due to certain aspects like poorly drafted contracts ,cultural differences , misunderstandings between the parties  it may lead to the termination of agreement.

Disadvantages of the Joint Venture Agreement –

Basically joint ventures have more advantages compared to disadvantages but one should keep an eye on the disadvantages while entering into joint venture agreement. Some of the disadvantages are as follows –  

1] Liability – 

In case of joint ventures there is no liability protection being provided to the businesses involved 

2] Unequal Involvement-

Both the parties involved in joint ventures do not share equal involvement in the business activities and functioning . For example – When one company is monitoring the production department and the other is responsible for the sales and marketing department .Therefore the responsibilities of both companies differ and as a result the involvement period is also different.

3]  Objective –

The  objectives of joint ventures are not clearly defined among people involved in the joint venture agreement.

4] Cultural Differences –

In joint ventures two parties are involved and both the parties have different Management teams and carry different working styles  and due to this difference of management culture it may lead to poor cooperation and integration of both parties.

Termination of Joint Venture Agreement –

The various factors that may lead to the termination of joint venture agreement are as follows –

1] The parties involved are not able to solve the disputes arising between them 

            2] Breach of agreement is done by one of the parties involved in the agreement 

            3]Due to Insolvency 

            4]The Project being defined in agreement is being finished or completed 

The termination policy and rules of the joint venture should be clearly stated in the agreement and in case a joint venture is being terminated due to default of one of the parties involved then the other party shall have the opportunity to get remedies or relief for the losses incurred from other party.

As per the conclusion , it shows that Joint Ventures provides numerous opportunities and advantages to the business involved in the agreement to come together to share their capital , ideas , resources , technology ,equipment ,expertise etc. in order to develop a desired project.

Therefore a proper Agreement is needed to be drafted in order to have a successful joint venture while improper drafting of Agreements may lead to the termination of Joint venture agreement.

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Decoding the benefits of registering a business

Decoding the benefits of registering a business

Incorporating or Registering your business idea is not a bad idea in India as it gives a strong foundation to your business aspirations so that you don’t come crashing down.

Benefits of Business Registration in India

Registering a business has importance everywhere in the world, but it is India where it is more significant. The major benefits of registering a Business in India are as Follows-

  1. It Gives you Structure- when you register a business in India then you give a proper structure to your business. As without proper structure there is no order in Business and therefore, there is hardly any profit. Without a proper business criteria there is no business conducted properly. Therefore, it is always advisable to register a business for the proper and smooth brunning of your business.
  2. Separate Entity- It forms a separate entity once you form a separate business.  Once you get the certificate of incorporation, you apply for PAN card in the name of the company which is considered as a Valid ID of the company. 
  3. Perpetual Existence- we live in an era of startups, everyone not only wants to make money, they want to establish a legacy. When an entity is registered then it becomes a separate entity. Therefore, if and when the owner of the business dies , the business can continue to exist.
  4. Registered Business are more trusted- generally a business which is a registered one is trusted more are compared to the unregistered one. We are not saying that unregistered business are worthless, but they are hidden more,less advertised, less marketed and therefore, less trusted. However once you have registered your business 

, you are free to reveal yourself and market yourself.

      5.  Trust then leads to more funds- If you have trust of the people then you would have more trust of the investors and Financial institutions as well. A business cant survivev on the personal assets of its owner, it needs outside funding for expansion, diversification. Being a registered business attracts more investors towards you, who see your business a legitimate one. 

       6. Limited Liability-  Limited liability is probably the most used terms when “Benefits of Business Registration” is the topic. however , people are still fuzzy about its meaning.

A company is a separate legal entity, then is its own person has only has to bear its own losses.

The above statement basically means that if the company goes through any loss on finances, personal finances or assets of the Directors of this company are not affected. 

Conclusion

When it comes to the business registration benefits there are any, but what is lacking is the understanding of these benefits. Hope that through this blog we have enlightened you with the understanding of what the benefit actually means. For Registration of Business please contact BIATconsultant.com.

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