A Non-Banking Financial Company (NBFC) is usually engaged in the business of monetary matters, shares, stocks, bonds, debentures, securities issued by the Government. They also deal with insurance business or chit business, marketable nature, leasing, hire-purchase, etc. However, it does not include any institution whose principal business is industrial activity, agriculture, construction of immovable property or the sale, and purchase.
NBFC companies are registered under the guidance Companies Act, 1956 of India. They don’t have any bank license. In general, NBFCs are not allowed to take monetary deposits from the public, which keeps them outside the scope of traditional oversight that is required under banking regulations. NBFC cannot accept demand deposits however they can accept term deposits. They are not considered under part of the payment and settlement systems as well.
We can quickly get the list of NBFCS in India. For example, People residing in Hyderabad can easily Google search the List of NBFC in Hyderabad when needed.
NBFCs provide banking services such as money markets, loans, credit facilities, retirement planning, underwriting and merger activities. Different regulators regulate NBFCs in India such as RBI, SEBI, Irda, National Housing Bank and Department of Company. Reserve Bank of India (RBI) monitors the working and operations of NBFCs within the structure of the Reserve Bank of India Act, 1934 (Chapter III-B) and issue of the directions by it. Reserve Bank of India (RBI) issued a notification on November 9, 2017, which outlines the norms for outsourcing of functions and services by Non-Bank Financial Institution (NBFCs).
Usually, the 50-50 test is used to register an NBFC with RBI. 50-50 Test means at least 50% assets of the company are financial assets and its income is more than 50% of the gross income.
RBI regulates the companies which deal in hire purchase, financial leasing, lending, accepting deposits and acquisition of shares/stocks, etc. NBFCs controlled by other regulators are exempted from the registration with RBI. They need to register with their respective regulators. The companies with activities like stock broking, merchant banking, etc. are regulated by SEBI while Department of Company Affairs regulates Nidhi and Chitfund.
National Housing Bank monitors Housing finance companies. According to the norms, NBFCs cannot outsource functions like strategic and compliance functions to know your customer (KYC) standards, a sanction of loans. Internal audit, management of investment portfolio. The staff of service providers should have access only up to an extent which is required to perform the outsourced function on their customers’ information. Boards of NBFCs should approve a code of conduct for recovery agents, direct sales and the collection of debts, NBFCs, and their agents should not resort to harassment or intimidation of any kind.
All NBFCs’ have been instructed and directed to set up a grievance redressed system, which will cater to the problems of outsourced firms and the services they look to provide. Various Non-Banking Financial Companies in India work on various financial services.
To find more information about the List of NBFC in Hyderabad, kindly refer to Google or any other relevant search engine platform.