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NON-BANKING FINANCIAL

COMPANIES (NBFC)
WHAT ARE NBFC’S ??

 Financial institutions that provide banking


services without meeting the legal definition of a
bank, i.e. does not hold a banking license.

 Principal business of receiving deposits under any


scheme or arrangement or any other manner, or
lending in any manner.
SERVICES
 Suppliers of loans and credit facilities

 Supporting investments in property

 Trading money market instruments

 Funding private education

 Wealth management such as Managing portfolios


of stocks and shares
 Underwrite stock and shares

 Retirement planning
 Advise companies in merger and acquisition

 Prepare feasibility, market or industry studies for


companies

 Discounting services e.g., discounting of instruments


DIFFERENCE BETWEEN BANKS
AND NBFC’S
 NBFC cannot accept demand deposits.

 It is not a part of the payment and settlement


system and as such cannot issue cheques to its
customers.

 Deposit insurance facility of DICGC is not


available for NBFC depositors unlike in case of
banks.
CLASSIFICATION
 Development finance institutions

 Equipment leasing Company

 Hire-purchase Company

 Loan Company

 Investment Company

 Venture capital companies


REGULATIONS
 It is mandatory that every NBFC should be
registered with RBI.

 Requirements for registration:

 A company incorporated under the Companies Act,1956


 Desirous of commencing business of non-banking financial
institution as defined under Section 45 I(a) of the RBI Act,
1934
 The company is required to submit its application for
registration.
 The bank issues certificate of registration after satisfying
itself
 Only those NBFCs holding a valid certificate of
registration with authorisation to accept public
deposits can accept/hold public deposits.

 Accept/renew public deposits for a minimum


period of 12 months and maximum period of 60
months
NBFCs regulations which the depositor may
note at the time of investment:

 NBFCs cannot offer interest rates higher than the


ceiling rate prescribed by RBI from time to time.

 It cannot offer gifts/incentives or any other


additional benefit to the depositors.

 NBFCs (except certain AFCs) should have


minimum investment grade credit rating (MIGR).
 The deposits with NBFCs are not insured.

 The repayment of deposits by NBFCs is not


guaranteed by RBI.

 The NBFCs are allowed to accept/renew public


deposits for a minimum period of 12 months and
maximum period of 60 months
 The Reserve Bank of India does not accept any
responsibility or guarantee about the present
position of the NBFCs.

 A proper deposit receipt should be insisted.

 The receipt shall be duly signed by an officer


authorised by the company in that behalf.
THANK YOU !!

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