NBFC


 A Non Banking Financial Company (NBFC) is a
company registered under the Companies Act, 1956 of
India, engaged in the business of loans and advances,
acquisition of shares, stock, bonds ,hire-purchase,
insurance business.
 It does not include any institution whose principal
business is agriculture or industrial activity or the sale,
purchase or construction of immovable property.
 The working and operations of NBFCs are regulated by
the Reserve Bank of India(RBI) within the framework of
the Reserve Bank of India Act, 1934 (Chapter III B) and
the directions issued by it.
 TYPES OF NBFCs IN INDIA

 Asset Finance Company (AFC)

Principal business for this purpose is defined as
aggregate of financing physical assets supporting
economic activity and income arising therefrom is not
less than 60% of its total assets and total income
respectively. For example,automobiles, tractors and
material handling equipments
 Investment Company (IC)
IC means any company which is a financial institution
carrying on as its principal business the acquisition of
securities.
 Loan Company (LC)
LC means any company which is a financial institution
carrying on as its principal business the providing of
finance whether by making loans or advances or
otherwise for any activity other than its own but does not
include an Asset Finance Company.

 Infrastructure Finance Company (IFC)

IFC is a non-banking finance company which deploys at
least 75 per cent of its total assets in infrastructure loans,
has a minimum Net Owned Funds of Rs. 300 crore, has a
minimum credit rating of ‘A ‘or equivalent and a CRAR of
15%.
 Infrastructure Debt Fund: Non- Banking Financial
Company (IDF-NBFC)
IDF-NBFC is a company registered as NBFC to facilitate the
flow of long term debt into infrastructure projects. It raises
resources through issue of Rupee or Dollar denominated bonds
of minimum 5 year maturity. Only Infrastructure Finance
Companies (IFC) can sponsor IDF-NBFCs.

 Non-Banking Financial Company – Factors (NBFC-Factors)

NBFC-Factor is a non-deposit taking NBFC engaged in the
principal business of factoring. The financial assets in the
factoring business should constitute at least 50 percent of its
total assets and its income derived from factoring business
should not be less than 50 percent of its gross income.
 Gold Loan NBFCs in India
Though there are many NBFCs offering gold loans in
India, about 95 per cent of the gold loan business is
handled by three Kerala based companies, viz.,
Muthoot Finance, Manapuram Finance and Muthoot
Fincorp.

 Residuary Non-Banking Companies (RNBCs)

Residuary Non-Banking Company is a class of NBFC
which is a company and has as its principal business
the receiving of deposits, under any scheme or
arrangement or in any other manner and not being
Investment, Asset Financing, Loan Company. These
companies are required to maintain investments as per
directions of RBI, in addition to liquid assets
 Difference between NBFCS & Banks

NBFCs perform functions similar to that of banks but

there are a few differences-

 An NBFC can not accept demand deposits

 An NBFC is not a part of the payment and settlement
system
 An NBFC cannot issue cheques drawn on itself
 Deposit insurance facility of the Deposit Insurance
and Credit Guarantee Corporation is not available for
NBFC depositors, unlike banks.
 L & T FINANCE

 L&T Finance Holdings Ltd., incorporated in the year
2008, is a Large Cap company (having a market cap
of Rs 12536.8 Cr.) operating in Finance sector.
 L&T Finance Holdings Ltd. key Products/Revenue
Segments include Dividend which contributed Rs
247.23 Cr to Sales Value (85.06% of Total Sales),
Interest which contributed Rs 43.39 Cr to Sales Value
(14.93% of Total Sales), for the year ending 31-Mar-
2015.
 For the quarter ended 31-Dec-2015, the company has
reported a Consolidate sales of Rs. 1819.81 Cr., up
1.47% from last quarter Sales of Rs. 1793.38 Cr. and
up 15.76% from last year same quarter Sales of Rs.
1571.99 Cr. Company has reported net profit after tax
of Rs. 211.24 Cr. in latest quarter.
 The company’s management includes Mr.Y M
Deosthalee, Ms.Kamakshi Rao, Mr.N
Suryanarayanan, Mr.Sachinn Joshi, Ms.Upma Goel,
Mr.Amit Chandra, Mr.B V Bhargava, Mr.Dinanath
Dubhashi, Mr.Harsh Mariwala, Mr.N
Suryanarayanan, Mr.P V Bhide, Mr.R Shankar
Raman, Mr.S V Haribhakti, Mr.T Thomas Mathew.
L & T VISION
The BOD’s has complete access to the company
information through


 Annual revenue budgets, financing and capital
expenditure plans
 Quarterly results and results of operations of
independent company and business segments
 Minutes of meetings of BODs, Audit committee,
Nomination and Remuneration committee and
shareholder’s grievance committee
 Quarterly report on fatal accidents
 Developments in respect of human resources
Commitment to external initiatives

L&T follows several frameworks to report on their
economic, environmental and social performances.

 Global Reporting Initiative (GRI) framework

 The national Voluntary Guidelines (NVG)
 United National Global Compact (UNGC)
 International Labour Organization (ILO)
 PRODUCT PERFORMANCE

 The contribution to their green portfolio to overall
sales increased from 13.6% last year to 14.31% this
year
 The new gateway of India – Terminal 2 at Mumbai
airport has received the gold certificate from
Leadership in energy and Environmental
Design(LEED)
 The 83.8 m Air Traffic Control (ATC) tower – tallest
in India , was commissioned at the Chhatrapathi
Shivaji international airport, Mumbai
 CSR POLICY

 L&T ensures ethics and transparency in their
engagements with stakeholders and advocate
responsible business practices
 They incorporate social and environmental
considerations in their business operations
 Foster a culture of trust and enhance the well being
of employees and communities
 Promote social equity and they are a partner with
health care , education and skill building
 Adopt sustainable and resource efficient processes
and provide value added products and services
GOING GREEN

 CORPORATE HR POLICY

 Acquiring, developing and retaining a pool of high
caliber talent
 Enabling and empowering their employees to be
creative and innovative
 Establishing systems and practices for maintaining
transparency, fairness and equity
 Creating a culture of continuous learning,
competitiveness and excellence through change
management, respecting ethics, values and good
governance
 Growth for all stakeholders

 The Indian economy grew by 4.7% in 2013-14
 The second successive year of 5% growth
 The domestic economic slowdown worsened with
limited investments made in the private sector and
many government projects in uncertainty
 This impacted the pace of capital expenditure in
infrastructure, power and industrial sectors
 Against this challenging economic environment, they
have performed commendably on most key
performance parameters
Stake holder’s engagement
 Order inflows of the company have shown a robust of
15% growth over the previous year
 The company completed the transfer of its
hydrocarbon business undertaking along with related
assets, liabilities and specific identified reserves to the
wholly owned subsidiary – L&T hydrocarbon
engineering