NBFC in India and Types of NBFCPosted by Enterslice on January 5th, 2019 Over the years, Non-Banking Financial Companies has gained a significant role in providing affordable financial services and constitute an integral part of the financial system in India. Despite sluggish economic growth NBFCs have been gaining market share. With the growing demand of NBFCs, it has a separate Department of Non-Banking Supervision which is entrusted with the responsibility of regulation and supervision of NBFC. According to RBI, an NBFC is a company registered under the Companies Act, 1956 engaged in the business of loans and advances, acquisition of shares, stocks, bonds, debentures or securities issued by Government or local authority or other marketable securities. The operations of NBFC are regulated by RBI within the framework of the Reserve Bank of India Act, 1934 (Chapter III B). NBFC in India NBFC are involved in raising funds from the public whether directly or indirectly and lending to ultimate spenders. They provide loans to the various wholesale and retail traders, small-scale industries and self-employed persons. Gradually, they are being recognized as complementary to the banking sector in reaching out credit to the unorganized sector especially MSME due to the following benefits: · strong risk management capabilities to check and control bad debts; · customer-oriented services; · simplified procedures; · attractive rates of return on deposits; · timeliness in meeting the credit needs of different sectors and many others Types of NBFC1. Liabilities based NBFC· NBFC having Public deposits (NBFC-D) · NBFC not having public deposits (NBFC-ND) 2. Asset-based Classification
3. Size based ClassificationCore Investment Company: A NBFC with asset size of 100 crores and above and carrying on a business of acquisition of shares and securities satisfying the condition that it deploys 90% of its net assets in the form of investment in equity shares, preference shares, bonds, debentures, debt or loans in group companies out of which 60% should be invested in equity shares including instruments compulsorily converted into equity shares . Like it? Share it!More by this author |