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Common Reasons for RA License Application Rejection in India
It becomes necessary for any organization that wants to employ Indian nationals in foreign countries to obtain an RA License as per the requirements under the Emigration Act, 1983 and the rules, regulations and guidelines prescribed by the Ministry of External Affairs (MEA).
The RA registration process entails scrutiny of documents, verification, inspection of the office as well as fulfilling the financial and other criteria prescribed. The process can take time, require resubmission of documents for clarity or even get rejected if the relevant requirements are not fulfilled.
However, one thing that the applicant must be aware of is that the RA registration scheme provides for different categories according to the recruitment capacity of the applicant. The two categories are as follows:
| Category | Permitted Recruitment Capacity | Government Fee | Bank Guarantee |
|---|---|---|---|
| Category 1 | Up to 100 workers | ₹10,000/- | ₹8 lakh |
| Category 2 | 1000+/Unlimited workers | ₹25,000/- | ₹50 lakh |
Note: Applications must check the current requirements on fees, eligibility, capacity, and bank guarantees with the competent MEA/PGE authority prior to submission, as the regulatory requirements are subject to change from time to time.
What is the RA License?
The RA License is otherwise called the Registration Certificate of Recruiting Agents which is the required license for the eligible persons/entities who wish to recruit Indian workers for foreign employment.
After registering the recruiting agent can then perform the process of foreign recruitment based on the terms and conditions of the registration.
It should be noted that registration of the company or business license alone does not mean that they will be qualified to conduct foreign recruitment.
Registration Categories for RA
It would be advisable that the applicants select the proper category for registration according to their activities in overseas recruitment.
Category 1 – Overseas Recruitment up to 100 Persons
This is the category for the individual who recruits up to 100 persons in a foreign country, on the basis of regulations in this regard.
According to the fees for the above category:
- Fees for Government registration: ₹10,000/-
- Bank Guarantee: ₹8,00,000/-
- Number of Recruits: up to 100
This is a category for newly created recruiting companies who wish to conduct limited activities in overseas recruitment.
Category 2 – Unrestricted Recruitment or more than 1000 Persons
This is a category for recruiting agents who conduct unlimited recruitment, on the basis of regulations in this regard.
According to the fees for the above category:
- Fees for Government registration: ₹25,000/-
- Bank Guarantee: ₹50,00,000/-
- Number of Recruits: Unlimited, on the basis of regulations
The higher bank guarantee requirement is for unlimited recruitment.
Common Reasons of Rejection of the Application
1. Application Under Wrong Recruiting Category
The other error that may occur during the recruiting process is the application under the wrong recruiting category.
This occurs when a recruiting company has intended to recruit more than 100 people but lacks qualification to use the limited recruiting category.
How to Avoid it
Before submission, make sure you know the following;
- Number of expected recruits per year
- Number of expected recruits to employ
- Requirements of foreign employers
- Relevant recruiting category
- Government fee requirement
- Bank Guarantee
The right choice of recruiting category right from the beginning will avoid time wastage for clarification.
2. Wrong Fee to Government
The applicant should pay the government fee according to the selected RA registration category.
In terms of categorization according to mentioned criteria,
- More than 100 people: Rs.10,000/-
Payment of wrong fee will result in deficiency in the application or clarification. Check the latest required government fee according to the selected category.
3. Absence of Mandatory Bank Guarantee
Bank guarantee happens to be one of the most important financial requirements for RA registration.
As mentioned above in the point, the category-wise requirement is:
- Up to 100 workers: Bank guarantee of Rs 8 lakh
- Above 100/unlimited: Bank guarantee of Rs 50 lakh
Failure to submit the bank guarantee in the correct format or submission of an incorrect bank guarantee amount will result in delay in the application process.
How to avoid it
Check before applying:
- Bank guarantee amount
- Beneficiary name and other details
- Format
- Validity
- Requirements of the issuing bank
- Claim period wherever applicable
- Bank documents
The bank guarantee should be prepared as per the requirements stipulated by the competent authority.
4. Incomplete Documents
Incomplete documents happen to be one of the most common causes of deficiencies in application.
Some of the required documents are:
- Certificate of incorporation
- PAN
- GST registration, if applicable
- Memorandum and Articles of Association
- Partnership/LLP documents
- Director/partner KYC
- Proof of office address
- Rent agreement/Ownership documents
- Bank documents
- Affidavit/Declaration
- Bank guarantee
- Other documents required by the authority
How to avoid it
Maintain a category-wise checklist prior to applying.
5. Inconsistencies in Company Information
Information furnished by the company should tally with its statutory information.
The issues encountered are:
- Company name inconsistencies
- Location inconsistencies
- Name of director/ partner inconsistencies
- PAN inconsistencies
- Incorporation details inconsistencies
- Authorized signatory details inconsistencies
How to avoid the problem
Make sure that all documents are verified before the submission.
6. Non-conformities in Office Premises
Office premises are open to any type of verification and/or inspection.
The non-conformities arise due to:
- Non-functioning office
- Incomplete address documents
- Office premises not conforming to the application
- Infrastructure unavailability
- Verification of premises not possible
- Less than 50 sq. meter built up area of premises
How to avoid the problem
Ensure that office premises are ready for submission and all the documents related to premises are available.
7. Office Inspection
Presentation of the requisite document does not guarantee the issuance of the RA registration certificate.Office inspection can be done by the responsible department with an aim of verifying the accuracy of the information provided in the application form.
Thus, it is important to ensure that:
- The office is located at the aforementioned address.
- The office is accessible.
- There are infrastructural facilities.
- There are appropriate documents.
- There are business operations.
8. Bad Character/Policing Verification
Character and background of the applicant/directors can also be a factor of the RA registration procedure. Also, Misinformation and failure to pass the police verification may present challenges.
How to avoid this problem
It is important to make sure that all information regarding the applicant/directors is accurate.
9. Lack of Compliance with Financial Obligations
The applicant must be prepared to comply with the requirements depending on the selected category.
For example, the applicant must consider the effect on finances in case of the necessary bank guarantee:
- ₹8 lakh for the up to 100 worker category
- ₹50 lakh for the high or unlimited category
The applicants must make sure that the necessary financial documents are in place whether before or during the application process.
10. Incomplete Applications or Outdated Documents
Incompleteness of an application and using outdated documents can become another problem.
The procedure and requirements from the government and the portal can change over time.
How to avoid it
Check the present requirements before applying.
11. Lack of Business Information
The authority may ask for the information regarding the proposed recruiting of foreign workers.
The applicants must be prepared to provide the following information:
- Nature of recruitment activities
- Foreign employers
- Country of recruitment
- Number of foreign workers to recruit
- Address of the office
- Business structure
- Financial capacity
12. Past Non-Compliance
Current Recruiting Agents seeking renewal or other types of licenses should have proper compliance documents.
Problems like pending grievances, violations, regulatory actions or non-compliance could impact the licensing process.
RA License Application Process
The process of application would typically involve the following steps:
Step 1 – Evaluate Eligibility
Evaluate whether the intended operation falls into overseas recruitment activities where RA license registration is mandatory.
Step 2 – Choose the Right Category
Determine whether the applicant needs:
- RA with up to 100 workers category, or
- RA with more than 1000/unlimited category
Step 3 – Organize the Financial Requirement
Organize the relevant bank guarantee:
- ₹8 lakh for up to 100 workers
- ₹50 lakh for more than 100/unlimited workers
Step 4 – Organize Documents
Prepare company/entity KYC documents, individual KYC documents, office documents, financial documents, etc.
Step 5 – Prepare Application & Pay Application Fee
Fill up the application form properly and pay the relevant government fees.
Step 6 – Scrutiny of Documents
The application along with documents would be evaluated by the competent authority.
Step 7 – Verification/Inspection of Proposed Office
If necessary, inspection/verification of the proposed office is carried out.
Step 8 – Grant of Registration
After the satisfaction of requirements, issuance of the RA registration certificate becomes possible.
How To Avoid Rejection of RA License
It would be wise to conduct a thorough pre-filing check before applying.
Pre-Filing Checklist
- Choice of correct RA Category
- Recruitment capabilities of entity
- Proper government fee
- Proper bank guarantee
- Proper documents of the company/individual/entity
- Director/partner KYC
- Documents for the office address
- Preparation of the office for inspection
- Declarations and affidavits
- Verification of all information
- The most updated application requirements
- Checking of the whole application before filing
What Happens when the RA License Application is Rejected?
In case of rejection or return of the application, the initial step is to get to know the cause of rejection.
The first thing to know is if the rejection is because of:
- Choice of category
- Government fee
- Bank Guarantee
- Documents
- Inspection of the office
- Verification
- Eligibility
- Financial Requirement
- Previous compliance requirement
- Rectification of the deficiency is required.
Conclusion
RA License in India is not just about the completion of an online application form. The candidates need to select the proper recruitment category, be financially eligible, submit proper documents, and make sure that the office and business structure being considered by them satisfy all the necessary criteria. As government fees can vary, candidates need to consult the latest guidelines of MEA/PGE.
A professional compliance consultant is able to help with RA License eligibility, category selection, documentation, bank guarantee arrangement, submission of application, office inspections preparation, and other clarifications after registration. For professional assistance, visit our website.
Frequently asked questions
What is a RA License?
RA License is the license that applies to any person/entity who recruits Indian workers for overseas employment under the applicable emigration rules.
What are the two categories of RA License?
The category-wise breakup provided in this document is as follows:
Category 1: For up to 100 workers.
Category 2: Unrestricted number of workers under certain conditions.
What is the government fee for RA License for up to 100 workers?
The government fee for up to 100 workers' category as per the above fee structure is ₹10,000/-.
What is the government fee for the unrestricted category?
The government fee for the higher/unrestricted category is ₹25,000/-
What is the bank guarantee for up to 100 workers?
Bank Guarantee for Up to 100 Workers Category: ₹8 lakh
What will be the Bank Guarantee for Unlimited Category?
The Bank Guarantee for more than 100 workers/Unlimited Category, as mentioned above, will be ₹50 lakh.
Can I choose the 100-workers category even though my plan is to hire more than 100 workers?
The applicant is supposed to choose the category based on his/her hiring capacity.
Will my RA License application be disapproved due to my incorrect bank guarantee?
Yes, in case of an incorrect bank guarantee as per the requirements, this can be a defect in the application.
Do I need to have my office inspected for an RA License?
The office may be inspected/verified during the course of the registration. It is necessary to make sure that the stated office exists and has proper documents.
How do I make sure that my RA License application will not be rejected?
The best way is to conduct a pre-application compliance review regarding your eligibility, selection of category, government fee, bank guarantee, documents of the company, KYC and other requirements.
