PRESENTED BY – VIPUL SAH

SANJANA PADIYAR

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 What is NBFC?
 Registration with RBI.
 Regulations.
 Objectives of NBFC.
 Role of NBFCs.
 Importance of NBFCs.
 Types of NBFCs.
 Difference between Commercial Bank and NBFCs.
 NBFCs in India.

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 A Non-Banking Financial Company is a company
registered under the Companies Act, 1956.
 It is engaged in the business of Loans, Advances,
Acquisitions of share/ stock/ debenture/ securities
issued by government or local authority.
 Any company which has its own principles business of
receiving deposits under any scheme mention under
Companies Act, 1956 is also a N.B.F.C. (Residuary Non-
banking Company).

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 A company incorporated under the Companies Act,
1956 and desirous of commencing business of non-
banking financial institution as defined under Section
45 I(a) of the RBI Act, 1934 should comply with the
following:
 i. it should be a company registered under Section 3 of
the companies Act, 1956
 ii. It should have a minimum net owned fund of ₹ 200
lakh. (The minimum net owned fund (NOF) required
for specialized NBFCs like NBFC-MFIs, NBFC-Factors,
CICs is indicated separately in the FAQs on specialized
NBFCs)
 In India, The Reserve Bank of India regulates the
registration of NBFC.
 NBFCs do not hold banking license but they have to
follow the rules and regulations laid down by RBI.
 The company must be registered as a public limited
company or private limited company.
 The company must have a minimum net owned fund of
Rs.2 Crore.
 NBFCs can offer interest rates not higher than the
ceiling rate prescribed by RBI from time to time.
 Repayment of deposits by NBFCs is not guaranteed by
RBI.

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 Provides long term credit.
 Growth of National Income.
 Generate Employment Opportunities.
 Movement of Funds.
 Better Living Standard.
 Strengthening the Financial Market.
 Development of sectors like transport and
infrastructure.
 Substantial employment generation
 Help and wealth creation
 Broad base economic development
 Irreplaceable supplement to bank credit in rural
segments
 Major thrust on semi-urban, rural areas and first time
buyers/ users
 To finance economically weaker sections
 Huge contribution to the state exchequer
 It is impossible for bank to cater need of society alone
so NBFC and Micro Finance Companies become
indispensable.
 NBFCs in India have become prominent in wide range
of activities.
 To help in developing the large number of industries
as well as entrepreneur in different sectors of different
areas.
 To cover all the areas which are untouched by RBI or
other FCIs.

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ON THE BASIS OF DEPOSIT THEY
HOLD
1) Deposit accepting companies
2) Non deposit accepting NBFC’s
ON THE BASIS OF THEIR ACTIVITY
1) Asset finance company (AFC)
2) Investment company
3) Loan company
4) Infrastructure finance company
(IFC)
5) Core investment company
6) Micro finance company
7) Housing finance company
All NBFCs are either deposit taking or Non-deposit
taking. If they are non-deposit taking, ND is suffixed
to their name (NBFC-ND). The NBFCs which have
asset size of Rs.100 Crore or more are known as
Systematically Important NBFC. The Non-deposit
taking NBFCs are denoted as NBFC-NDSI.

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 Asset Finance Company: The main business of
these companies to finance the assets. It can either
be deposit taking or non deposit taking.
 Investment Company: The main business of
these companies is to deal in securities for
investment purpose.
 Loan Company: The main business of such
companies is to make loans and advances for
working capital finance. A financial company
would only be considered Loan company if their
50% of total assets are in lending & 50% of total
income arises from the assets which are lent.
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 Infrastructure Finance Company-Infrastructure finance
companies provide infrastructure loans for the
development of transport, water &sanitation, energy,
communication, social and commercial infrastructure.
 Core Investment Company-Core investment companies
are the non-banking financial company doing the business
of acquisition of securities and shares, and they hold 90%
of its asset in the form of bonds, equity shares, preference
shares. These companies need to invest not less than 60
per cent in the equity shares of group companies.


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 Micro Finance Company- It play some crucial role in
the development of India. Microfinance companies are
those financial institutions that offer small-scale
financial services in the form of credit and savings, to
the poor in rural, semi-urban areas.
 Housing Finance Company-Housing finance
companies have mention housing finance as the main
clause in its main memorandum of association .
NBFC’s have complemented commercials bank in
providing mid-term capital loans to individual or firms

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 NBFC cant accept demand deposits whereas banks do;
 NBFCs do not form part of the payment and settlement
system and can’t issue cheques drawn on itself but banks
can do it.
 While banks are incorporated under banking companies
act, NBFC is incorporated under company Act, 1956.
 The repayment of deposits by NBFCs is not guaranteed by
RBI.
 An NBFC can’t indulge Primarily in Agricultural, Industrial
Activity, Sale Purchase, Construction of Immovable
Property.
 Foreign Investment allowed up to 100% and in banks it is
allowed 74% . 12/8/2019 14
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 Power Finance Corporation Limited(1986)
Mukesh Kumar Goel is the Chairman & Managing
Director of the company. Power Finance Corporation
Limited is known to provide financial assistance to
different power projects in the country.

 Shriram Transport Finance Company

Limited(1979)
Transport Finance Company Limited focuses on funding
commercial and business vehicles, besides others.

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 Bajaj Finance Limited(2007)
It offers loans to doctors for career enhancement, home
loans, gold loans, individual Loans, business and
entrepreneur loans and is an extremely popular finance
company. It has over 1400 branches across the country with
more than 20000 employees.

 Mahindra & Mahindra Financial Services

Limited(1991) MMFSL is one of the most renowned
organizations and has two affiliates offering Insurance
services and rural housing financial services. 1000 branches
& 3 million customers.

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 Muthoot Finance Ltd (1888 Kerala)
Muthoot Finance Ltd sanctions loans only against pledge
of gold ornaments. It is a leader in India’s gold loan and
finance market. Headquarter in kerala operates over
44oobranches all over India.

 Tata Capital Financial Services Ltd(2007)

It is a subsidiary of Tata Sons Limited. TCFS
describes itself as a one-stop financial service provider
that caters to the diverse needs of retail, corporate and
institutional customers across businesses.

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 L & T Finance Limited (Larsen –turbo 1994)
Headquarter Mumbai
L & T offers funding services to different sectors like trade,
industry, agriculture, Commercial Vehicle loans, Individual
Vehicle loans, and corporate and rural loans.

 Aditya Birla Finance Ltd.(1991)

Aditya Birla Finance Limited, a part of the Aditya Birla
Financial Services. ABFL is registered with RBI as
a ‘systemically important non-deposit accepting
NBFC’ and it ranks among the top five largest private
diversified NBFCs in India.

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