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Non Banking Financial Services: (NBFCS)

Non-Banking Financial Companies (NBFCs) provide financial services like loans and advances without holding a banking license. NBFCs differ from banks in that they cannot accept demand deposits or issue checks to customers, and deposit insurance is not available. Most NBFCs must register with the Reserve Bank of India (RBI), though some categories are regulated by other bodies like the National Housing Bank. To register, an NBFC needs a minimum net owned fund of Rs. 2 crores. NBFCs can be investment companies, loan companies, or asset finance companies.

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74 views

Non Banking Financial Services: (NBFCS)

Non-Banking Financial Companies (NBFCs) provide financial services like loans and advances without holding a banking license. NBFCs differ from banks in that they cannot accept demand deposits or issue checks to customers, and deposit insurance is not available. Most NBFCs must register with the Reserve Bank of India (RBI), though some categories are regulated by other bodies like the National Housing Bank. To register, an NBFC needs a minimum net owned fund of Rs. 2 crores. NBFCs can be investment companies, loan companies, or asset finance companies.

Uploaded by

rashmymoray
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPT, PDF, TXT or read online on Scribd
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Non Banking Financial

Services
(NBFCs)
What is NBFC?
The Co. registered under Co. Act 1956
Reg. under RBI Act 1934, u/s 45-IA
Providing banking services without meeting legal
definition of banks such as holding a Bank license
Engaged in the business of loans and advances,
acquisition of shares/stock/bonds/debentures and
other securities issued by government authority or
other securities of like marketable nature leasing hire-
purchase, insurance business, chit fund-business, but
does not include any institution whose principal
business is that of agriculture activity.

How NBFCs differ from Bank?
A NBFC cannot accept demand deposits
It is not a part of payment and settlement
systemthat is why it cannot issue cgewues to
its customers
Deposit insurance facililty of DICGC is not
available for NBFC depositors

Does NBFC registered with RBI?
In section 45-IA RBI Act 1934, NBFC should
be registered with RBI
But not for all category of NBFCs
There are certain categories of NBFCs which
are regulated by other regulators
As
Housing Finance companies are regulated by
NHB
Venture capital fund, Stock Broking
Companies are registers with SEBI
Insurance Companies holding a valid
certificate of registration issued by IRDA
Nidhi Co. registered under section 620-A Co.
Act 1956
Requirements for Registration
A NBFC should have minimum net owned
fund of Rs. 2 crs
The company is required to submit its
application for registration in the prescribed
format along with necessary documents
Types of NBFC
Equipment Leasing Co
Hire Purchase Co
Loan Co
Investment Co
From 6 Dec 2006 NBFC are
Investment Co
Loan Co
Asset Finance Co.- financial co. whose principal
business is that of financing the physical assets which
support various productive /economic activities in the
country

Investment Company
Investment Company is a company which is a
financial institution carrying on as its principal
business is the acquisition of securities.
An investment company is a company whose main
business is holding securities of other companies
purely for investment purposes. The investment
company invests money on behalf of its shareholders
who in turn share in the profits and losses

Other Names of NBFC
Non-banking finance Institutions
Non-depository credit Institutions
Lending Companies

Can all NBFC accept Public
Deposits
No all NBFC cannot accept Public Deposits
So what are the requirements for accepting?
Holding a valid certificate of registration with
authorization to accept
Should have minimumnet owned fund



Is there any ceilings on the
acceptance of public deposit?
Depends on the Category of NBFC
Ceiling on public deposit
AFC maintaining CRARof 15% without credit rating
Rate of I nterest may be paid on public deposits
Max rate of Interest offered by NBFC are 11%
Minimum period of time 11
Maximum period of time 60 months

NBFC regulations related to
Deposits
The repayment of deposits is not guaranteed
by RBI
The deposit with NBFC are not insured
NBFC should have minimum investment grade
credit rating
In case of NBFC defaults in repayment of
deposits
The Depositor can approach Company Board
of Law, Consumer forum, File a suit

Responsibilities of NBFC in relation
to Public Deposits
Statutory annual returns of deposits
Quarterly returns on liquid assets
Half yearly return on prudential norms
A copy of the credit rating obtained once a
year along with one of the half yearly return
prudential norms
Cholamandalam Financial Service
Group

Retail Finance
Capital Markets
Insurance
NBFC
Automobile
Finance
AMC
Mutual Funds
Distribution
Advisory
Services
Securities
Broking, PMS
General
Insurance
Risk
Services
Reliance Capital
Investments
Private Equity
Investments
Proprietary
Trading
Asset Mgnt Co
Mutual Funds
Portfolio
Management
Off shore
fund
Insurance
Life Insurance
General
Insurance
Broking
Stock
in Derivatives
Commodities
Forex
and Offshore
Insurance
Consumer
Finance

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