Scribd Logo
Upload

Welcome to Scribd!

  • 48 views

    NBFC

    Uploaded by

    Bhumi Desai
    An NBFC is a non-banking institution registered under the Companies Act that provides financial services like loans, acquisition of shares/stocks, leasing, etc. but cannot accept demand deposits or issue checks. While NBFCs perform bank-like functions, they cannot participate in the payment system or offer deposit insurance. It is mandatory for NBFCs to register with the RBI, except for certain categories regulated by other bodies. Originally, NBFCs were classified as equipment leasing, hire purchase, loan or investment companies, but are now classified as asset finance, investment or loan companies depending on their principal business activities. To register as an NBFC, a company must be incorporated under the Companies Act and have a minimum

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd

    NBFC

    Uploaded by

    Bhumi Desai
    48 views2 pages
    An NBFC is a non-banking institution registered under the Companies Act that provides financial services like loans, acquisition of shares/stocks, leasing, etc. but cannot accept demand deposits or issue checks. While NBFCs perform bank-like functions, they cannot participate in the payment system or offer deposit insurance. It is mandatory for NBFCs to register with the RBI, except for certain categories regulated by other bodies. Originally, NBFCs were classified as equipment leasing, hire purchase, loan or investment companies, but are now classified as asset finance, investment or loan companies depending on their principal business activities. To register as an NBFC, a company must be incorporated under the Companies Act and have a minimum

    Copyright

    © Attribution Non-Commercial (BY-NC)

    Available Formats

    DOCX, PDF, TXT or read online from Scribd

    Did you find this document useful?

    Is this content inappropriate?

    An NBFC is a non-banking institution registered under the Companies Act that provides financial services like loans, acquisition of shares/stocks, leasing, etc. but cannot accept demand deposits or issue checks. While NBFCs perform bank-like functions, they cannot participate in the payment system or offer deposit insurance. It is mandatory for NBFCs to register with the RBI, except for certain categories regulated by other bodies. Originally, NBFCs were classified as equipment leasing, hire purchase, loan or investment companies, but are now classified as asset finance, investment or loan companies depending on their principal business activities. To register as an NBFC, a company must be incorporated under the Companies Act and have a minimum

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    48 views2 pages

    NBFC

    Uploaded by

    Bhumi Desai
    An NBFC is a non-banking institution registered under the Companies Act that provides financial services like loans, acquisition of shares/stocks, leasing, etc. but cannot accept demand deposits or issue checks. While NBFCs perform bank-like functions, they cannot participate in the payment system or offer deposit insurance. It is mandatory for NBFCs to register with the RBI, except for certain categories regulated by other bodies. Originally, NBFCs were classified as equipment leasing, hire purchase, loan or investment companies, but are now classified as asset finance, investment or loan companies depending on their principal business activities. To register as an NBFC, a company must be incorporated under the Companies Act and have a minimum

    Copyright:

    Attribution Non-Commercial (BY-NC)
    Download as DOCX, PDF, TXT or read online from Scribd
    Download as docx, pdf, or txt
    You are on page 1of 2

    QUES -1 What is a Non-Banking Financial Company (NBFC)?

    ANS -1 A Non-Banking Financial Company (NBFC) is a company registered under the


    Companies Act, 1956 and is engaged in the business of loans and advances, acquisition of
    shares/stock/bonds/debentures/securities issued by Government or local authority or other
    securities of like marketable nature, leasing, hire-purchase, insurance business, chit business but
    does not include any institution whose principal business is that of agriculture activity, industrial
    activity, sale/purchase/construction of immovable property.

    A non-banking institution which is a company and which has its principal business of receiving
    deposits under any scheme or arrangement or any other manner, or lending in any manner is also
    a non-banking financial company (Residuary non-banking company).

    QUES 2. NBFCs are doing functions similar to banks. What is difference between banks &
    NBFCs ?
    ANS 2. NBFCs are doing functions akin to that of banks; however there are a few differences:

    (i) an NBFC cannot accept demand deposits; (ii) an NBFC is not a part of the payment and
    settlement system and as such an NBFC cannot issue cheques drawn on itself; and (iii) deposit
    insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available for
    NBFC depositors unlike in case of banks.
    QUES-3. Is it necessary that every NBFC should be registered with RBI?
    ANS 3. In terms of Section 45-IA of the RBI Act, 1934, it is mandatory that every NBFC should
    be registered with RBI to commence or carry on any business of non-banking financial
    institution as defined in clause (a) of Section 45 I of the RBI Act, 1934.

    However, to obviate dual regulation, certain categories of NBFCs which are regulated by other
    regulators are exempted from the requirement of registration with RBI viz. Venture Capital
    Fund/Merchant Banking companies/Stock broking companies registered with SEBI, Insurance
    Company holding a valid Certificate of Registration issued by IRDA, Nidhi companies as
    notified under Section 620A of the Companies Act, 1956, Chit companies as defined in clause
    (b) of Section 2 of the Chit Funds Act, 1982 or Housing Finance Companies regulated by
    National Housing Bank.

    QUES 4. What are the different types of NBFCs registered with RBI?
    ANS 4. Originally, NBFCs registered with RBI were classified as:

    (i) equipment leasing company; (ii) hire-purchase company; (iii) loan company; (iv) investment
    company.
    However, with effect from December 6, 2006 the above NBFCs registered with RBI have been
    reclassified as

    (i) Asset Finance Company (AFC) (ii) Investment Company (IC) (iii) Loan Company (LC)
    AFC would be defined as any company which is a financial institution carrying on as its
    principal business the financing of physical assets supporting productive/economic activity, such
    as automobiles, tractors, lathe machines, generator sets, earth moving and material handling
    equipments, moving on own power and general purpose industrial machines. Principal business
    for this purpose is defined as aggregate of financing real/physical assets supporting economic
    activity and income arising therefrom is not less than 60% of its total assets and total income
    respectively.

    The above type of companies may be further classified into those accepting deposits or those not
    accepting deposits.

    QUES 5. Updated on February 10, 2009 What are the requirements / is the procedure for
    registration with RBI?

    ANS 5. A company incorporated under the Companies Act, 1956 and desirous of commencing
    business of non-banking financial institution as defined under Section 45 I(a) of the RBI Act,
    1934 should have a minimum net owned fund of Rs 25 lakh (raised to Rs 200 lakh w.e.f April
    21, 1999).

    You might also like