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NBFC Swati - Ppt.pps
NBFC Swati - Ppt.pps
Financial institution
A financial institution is an institution which
collects funds from the public, and places
them in financial assets, such as deposits,
loans and bonds rather than tangible
property.
FINANCIAL
INSTITUTION
Non
Banking banking
institution institution
meaning
The financial institution which provide
various banking facilities but are not
termed as banks because they do not hold
banking license are known as non banking
financial institution.
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 / local authority /
other securities of like marketable nature,
leasing,
hire-purchase,
insurance business,
chit business
stock broking companies
merchant banking companies
RNBCs
NBFC does not include any institution whose principal
business is that of :
agriculture activity,
industrial activity,
sale / purchase / construction of immovable property.
Features of NBFCs
Registration with RBI is mandatory
All the NBFC are not entitled to accept public
deposits
NBFC can accept public deposit for a minimum
period of 12 months and maximum of 60 months
They cannot accept deposits repayable on
demand
NBFCs cannot offer interest rates higher than the
ceiling rate prescribed by RBI from time to time
NBFCs cannot offer gifts/incentives or any other
additional benefit to the depositors
CONTD.
NBFCs (except certain AFCs) should have minimum
investment grade credit rating.
The deposits with NBFCs are not insured
The repayment of deposits by NBFCs is not guaranteed by
RBI
There are certain mandatory disclosures about the company
in the Application Form issued by the company soliciting
deposits
If a NBFC defaults in repayment of deposit, the depositor can
approach
A. Company Law Board or
B. Consumer Forum or
C. file a civil suit to recover the deposits.
NBFIs VERSUS BANKs
BANKS NBFIS
ii. NBFCs cannot offer interest rates higher than the ceiling
rate prescribed by RBI from time to time. The present
ceiling is 11 per cent per annum. The interest may be paid or
compounded at rests not shorter than monthly rests.
viii. A copy of the Credit Rating obtained once a year along with
one of the Half-yearly Returns on prudential norms as at (v)
above.
Types of NBFC
Different types of NBFCs registered with RBI
Leasing
Leasing is a process by which a firm can obtain the use of a certain
fixed assets for which it must pay a series of contractual, periodic,
tax deductible payments.
The lessee is the receiver of the services or the assets under
the lease contract and the lessor is the owner of the assets. The
relationship between the tenant and the landlord is called a tenancy,
and can be for a fixed or an indefinite period of time (called the
term of the lease). The consideration for the lease is called rent.
IMPORTANCE
Non banking financial institutions have the
following importance in Indian economy.
Greater reach.
Flexibility in tapping resources.
Retail services to small and medium
business.
Important component of financial market.
strategies
Development of assets and competencies for
sustainable competitive advantage.
Selection of appropiate strategies
Development of initiatives
Drafting of action plan
Develop a model
Develop internal business plan
Develop tracking model
Create internal reporting pakage
Thank you