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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.
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
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.
Development finance institutions Equipment leasing Company Hire-purchase Company Loan Company Investment Company Venture capital companies
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 !!