Banking Awareness – Nbfcs

Hi friends, I am Shravan again. Here I am sharing only about of import points virtually NBFCs (Non-Banking Financial Companies) taken from News Papers. Happy Reading 🙂

A Non-Banking Financial Company (NBFC) is a company

  • Registered nether the Companies Act. 1956,
  • Its main line of piece of occupation organisation is lending, investments inwards diverse types of shares/stocks/bond/debentures/securities, leas-ing, hire-purchase, insurance business, chit business
  • Its main line of piece of occupation organisation is receiving deposits nether whatever scheme or organisation inwards 1 lump amount or inwards installments. 
However, a Non-Banking Financial Company does non include whatever establishment whose main line of piece of occupation organisation is agricultural activity , industrial activity, trading activity or sale/purchase/construction of immovable property. (Section 45 I (c) of the RBI Act, 1934) .

One fundamental human face to live on kept inwards persuasion is that the fiscal activity of loans/advances every bit stated inwards 45 I ( c), should live on for activity other than its own. In the absence of this provision, all companies would get got been NBFCs. 
NBFCs whose asset size is of Rs.100 cr or to a greater extent than every bit per final audited residuum canvass are considered every bit systemically of import NBFCs. 
The rationale for such classification is that the activities of such NBFCs volition get got a bearing on the fiscal stability inwards our country. 
The Reserve Bank of Republic of Republic of India regulates in addition to supervises Non-Banking Financial Companies which are into the line of piece of occupation organisation of (i) lending (ii) acquisition of shares, stocks, bonds, etc., or (iii) fiscal leasing or hire purchase. 
The Reserve Bank has been given the powers nether the RBI Act 1934 to register , lay downwards policy , termination directions, inspect, regulate, supervise in addition to do surveillance over NBFCs that come across the 50-50 criteria of main business. 
The Reserve Bank tin compass notice penalize NBFCs for violating the provisions of the RBI Act or the directions or orders issued past times RBI nether RBI Act. The penal activity tin compass notice too res-ult inwards RBI cancelling the Certificate of Registration issued to the NBFC, or prohibiting them from accepting deposits in addition to alienating their assets or filing a winding upwardly petition. 
RBI tightened Tier 1 working capital missive of the alphabet requirements in addition to said NBFCs wou-ld involve to concord working capital missive of the alphabet levels of at to the lowest degree of Rs 1 crore ($162,668) past times the terminate of March 2016 in addition to Rs two crore past times March-end 2017 to avoid losing their correct to operate. 
The country’s apex banking concern too said exclusively for certain investment-grade NBFCs would live on allowed to convey deposits, proverb the firms would get got until the end-March 2016 to larn a credit rating. RBI capped deposit-taking at 1.5 times the size of a firm’s minimum working capital missive of the alphabet – downwards from 4 times previously. 
NBFCs lend in addition to brand investments in addition to thus their activities are akin to that of banks; yet at that spot are a few differences every bit given below : 
  1. NBFC cannot convey need deposits;
  2. NBFCs produce non cast business office of the payment in addition to village scheme in addition to cannot termination che-ques drawn on itself; 
  3. deposit insurance facility of Deposit Insurance in addition to Credit Guarantee Corporation is non available to depositors of NBFCs, dissimilar inwards representative of banks.
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