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PRESENTATION ONNBFCs

Submitted by:

Manjoyt kaur


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AGENDA

Definition of NBFCs

Difference between Banks and NBFCs

Types of NBFCs

NBFCs Overview Services Provided

Customer services

Registration

Regulations

List of NBFCs in India

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DEFINATION OF NBFCs

Non-bank financial companies (NBFCs) are financial

institutions that provide banking services without meeting

the legal definition of a bank, i.e. one that does not hold

a banking license. These institutions are not allowed to take

deposits from the public. Nonetheless, all operations ofthese institutions are still exercised under bank regulation.

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DIFFERENCE BETWEEN NBFCS AND

BANKS

1. NBFC cannot collect deposits in the manner ofa bank.2. NBFC cannot issue checks drawn on itself.3. While banks are incorporated under bankingcompanies act, NBFC is incorporated undercompany act of 1956.

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TYPES OF NBFC

Asset finance Companies (AFC)

AFC are financial institutions whose principal business is of financing

physical assets such as automobiles, tractors, construction equipments

material handling equipments and other machines. Ex: Bajaj Auto Finance

corp.

Investment Companies (IC)ICs generally are involved in the business of shares, stocks, bonds,

debentures issued by government or local authority that are marketable in

nature. Ex: Stock Broking Companies.

Loan Companies (LC)

LCs are loan giving companies which operate in the business of providingloans. These can be housing loans, gold loans etc. Ex: Mannapuram Gold

Finance, HDFC

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SERVICES PROVIDED

NBFCs offer all sorts of banking services, such as loans and credit

facilities, private education funding, retirement planning, trading

in money markets, underwriting stocks and shares. These

institutions also provide wealth management such as managing

portfolios of stocks and shares, discounting services e.g. discountingof instruments and advice on merger and acquisition activities. The

number of non-banking financial companies has expanded greatly

in the last several years

as venture capital companies, retail and

industrial companies have entered the lending business. Non-bank

institutions also frequently support investments in property andprepare feasibility, market or industry studies for companies.

However they are typically not allowed to take deposits from the

general public and have to find other means of funding their

operations such as issuing debt instruments.

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CUSTOMER SERVICE

NBFCs provide prompt, tailor made service with least

hassles. This more than compensates for the higher

lending rates of NBFCs as compared to Banks & FIs

All customers get direct and easy access to and individual

attention of the top management

NBFCs cater to a class of borrowers who :-

- Do not necessarily have a high income

- But have adequate net worth- Are honest and sincere (gauged by the personal

touch maintained with them).

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A company incorporated under the Companies Act, 1956and desirous of commencing business of non-bankingfinancial institution as defined under Section 45 I(a) of theRBI Act, 1934 should have a minimum net owned fund ofRs 25 lakh(raised to Rs 2 crores w.e.f April 21, 1999).The company is required to submit its application forregistration in the prescribed format along with necessarydocuments for Banks consideration. The Bank issues

Certificate of Registration after satisfying itself that theconditions as enumerated in Section 45-IA of the RBIAct, 1934are satisfied.

REGISTRATION

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The RBI may cancel the certificate of registration of NBFCs

and cease to carry on the business in India. It has failed

to comply with any condition subject to which the

certificate was issued and it fails to submit for

inspection and its Books of Accounts and other relevant

documents when so demanded by an inspecting

authority of RBI.

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CONDITIONS FOR REGISTRATION

Cont..


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IN CASE A NBFC DEFAULTS IN REPAYMENTOF DEPOSIT WHAT COURSE OF ACTION

CAN BE TAKEN BY DEPOSITORS?

If a NBFC defaults in repayment of deposit, thedepositor can approach Company Law Board or

Consumer Forum or file a civil suit to recover thedeposits.

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REGULATIONS OF NBFCs

While NBFCs have been rendering many useful

services, several unhealthy features of their

working have also been observed. The protection of

savers from Mal practices has been one of theimportant issues.

The authority have evolved an appropriate regulatory

framework to oversee the operations of NBFCs. At

present all NBFCs except HFC are regulated by

National House of Banking.

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REGULATIONS ON NBFC

The NBFCs are allowed to accept/renew public deposits for aminimum period of 12 monthsand maximum period of 60months. They cannot accept deposits repayable on demand.

NBFCs cannot offer interest rates higher than the ceiling rateprescribed by RBI from time to time. The present ceiling is 11

per cent per annum. The interest may be paid or compoundedat rests not shorter than monthly rests.

NBFCs cannot offer gifts/incentives or any other additionalbenefit to the depositors.

They have to obtain a minimum credit rating from any creditrating agency.

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The RBI can direct them on their issues of credit and investment.

NBFCs have 10- 15% of their deposits in liquid assets.

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IS IT NECESSARY THAT EVERY NBFC

SHOULD BE REGISTERED WITH RBI?

In terms of Section 45-IA of the RBI Act, 1934, it is mandatory that

every NBFC should be registered with RBI to commence or carry

on any business of non-banking financial institution as defined in

clause (a) of Section 45 I of the RBI Act, 1934.

However, to obviate dual regulation, certain category of NBFCs whichare regulated by other regulators are exempted from the

requirement of registration with RBI viz. venture capital

fund/merchant banking companies/stock broking companies

registered with Sebi, insurance company holding a valid certificate

of registration issued by IRDA, Nidhi companies as notified underSection 620A of the Companies Act, 1956, chit companies as

defined in clause (b) of Section 2 of the Chit Funds Act, 1982 or

housing finance companies regulated by National Housing Bank.

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LIST OF NBFCs IN INDIA

ABIRAMI FINANCIAL SERVICES (INDIA) LTD

ABS LEASING & FINANCE ( INDIA ) LTD

BAJAJ AUTO FINANCE LTD

BANSAL MOTOR FINANCE LTD

DECCAN FINANCE LTD

GOBIND FINANCE & PROPERTIES PVT. LTD

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REFERENCES

www.rediff.com

www.nbfc. org.in

www.business-standards.com

www.wikipedia.com

www.nbfcrequirementsblogspot.com

www.slideshare.com www.nbfc.com

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http://www.rediff.com/http://www.nbfc.rbi.org.in/http://www.business-standards.com/http://www.wikipedia.com/http://www.nbfcrequirementsblogspot.com/http://www.nbfcrequirementsblogspot.com/http://www.slideshare.com/http://www.nbfc.com/http://www.nbfc.com/http://www.slideshare.com/http://www.nbfcrequirementsblogspot.com/http://www.wikipedia.com/http://www.business-standards.com/http://www.business-standards.com/http://www.business-standards.com/http://www.nbfc.rbi.org.in/http://www.nbfc.rbi.org.in/http://www.rediff.com/


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QUESTIONS

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THANK YOU

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Date post:	07-Apr-2018
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