NBFC stands for Non-Banking Financial Company. A Non-Banking Financial Company is the financial institution that is engaged with the banking services and is into the business of providing loans and advances but does not hold any banking license.
The Non-Banking Financial Company provides the services of banks like loans, investment in shares, stock markets, lease, hire purchase, insurance business, etc. NBFC does not include any institution related to agricultural activities, industrial activity, sale/purchase/construction of the property.
In general, these companies are not allowed to take deposits from the public, which keeps them outside the scope. These organisations play an important role in granting loans to urban as well as rural area, mostly granting loans for new ventures. NBFC has also become an important part of nation’s GDP, i.e. Gross Domestic Product. Most public prefer NBFC’s over banks because they feel secure, safe, efficient and quick when it comes to their financial requirements. Non-Banking Financial Companies whose asset size is of 500 crores are considered as systemically important NBFC’s.
The difference between banks and Non-Banking Financial Company are:
- NBFC cannot accept deposits
- NBFC cannot form issue cheques drawn
- Deposit insurance facility is not available to depositors, unlike banks
Types of Non-Banking Financial Companies:
- Loan company
- Investment Company
- Hire-Purchase company
- Mutual Benefit Finance Company
- Housing Finance Company
- Infrastructure Finance Company
- Equipment leasing Finance Company
- Micro Finance Institution
- Residuary Finance Company
- Asset Finance Company: It is a financial institution which carries out principal business supporting productive/economic activity.
- Investment Company: The principal business of Investment Company is carrying out the acquisition of securities.
- Loan Company: The principal business of Investment Company is providing the finance whether by making loans or advance but does not include an Asset Finance Company.
- Hire purchase company: The principal business of Investment Company is carrying out the activity of hire purchase transactions.
- Equipment Leasing Company: The principal business of Investment Company is carrying out the activity of leasing of equipment.
The Non-Banking Financial Companies registered under Reserve Bank of India can accept public deposits but has to follow some regulations which have been issued by Reserve Bank Of India. Those regulations are listed as follows:
- Those companies are not allowed to accept demands which are repayable on demand.
- Non-Banking Financial Companies cannot offer interest rates higher than the ceiling rate.
- The company cannot afford to give any gifts, benefits and offers to the depositors.
- Public deposits are allowed on one term: they are taken for a minimum period of twelve months and a maximum period of sixty months.
It is important to note that a Non-Banking Financial Company can carry on the business without obtaining a certificate from the bank without having owned funds of 25 lakhs.
Requirements for registration with RBI:
- It should be registered under section 3 of the companies act.
- It should have minimum funds owned for 200 lakh.
Different categories of Non-Banking Financial Companies registered with RBI:
- In terms of liabilities into deposit and non-deposit accepting NBFC.
- With the activity they conduct.
To find more information about the List of NBFC in Hyderabad,kindly refer to Google or relevant search platform.