NON-BANKING

FINANCIAL
CORPORATIONS
LYOFILL LITO PAULY

Definition
A Non-Banking Financial Company (NBFC) is a
company registered under the Companies Act,
1956 and is engaged in the business of Loans ,
Advances, Acquisition of
shares/stock/bonds/debentures/ securities issued
by Government or local authority or other
securities of like marketable nature, Leasing, Hirepurchase, Insurance business, Chit business.
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 nonbanking company).

Major NBFCs in India

Birla Global Finance

Cholamandalam Investment & Finance Co. Ltd
First Leasing Company of India
LIC Housing Finance
Sundaram Finance
CanFin Homes
Countrywide Finance
Housing Development Finance CompanySakura
Capital India Ltd

Classification of NBFCs

Equipment Leasing Company

Hire Purchase Company
Investment Company
Loan Company
Miscellaneous Non-Banking Companies

Difference between
NBFCs and Banks
A NBFC cannot accept demand deposits (demand
deposits are funds deposited at a depository
institution that are payable on demand -immediately or within a very short period -- like
your current or savings accounts.)
it is not a part of the payment and settlement
system and as such cannot issue cheque to its
customers drawn to itself; and
deposit insurance facility of DICGC (Deposit
Insurance and Credit Guarantee Corporation ) is
not available for NBFC depositors unlike in case of
banks.

Role of NBFCs
Development of sectors like Transport &
Infrastructure
Substantial employment generation
Help & increase wealth creation
Broad base economic development
Irreplaceable supplement to bank credit in rural
segments
major thrust on semi-urban, rural areas & first
time buyers / users
To finance economically weaker sections
Huge contribution to the State exchequer

Functions of NBFCs

Brokers of loanable funds.

Mobilization of savings.
Channelization of funds into investment,
Stabilize the capital market,
Provide liquidity.