What is NBFC?
NBFC Stand for (NON-BANKING FINANCIAL COMPANY). A company registered under the Companies Act which is engaged in the business of providing credit facilities and advances the acquisition of securities and debt instruments or other marketable securities like nature leasing hire, purchase insurance business, ship business, and non-banking institutions. Which is a company registered under the Companies Act and has the principal business of accepting deposits under any scheme as for the RBI act.
Categories do not fall under the view of an NBFC and any institution. ( Whose principle of business comprises of agricultural activities and any the institution, whose principal business comprises of industrial activity and any the institution, whose principal of business comprises a purchase or sale of any goods other than securities of any institution, and Whose principle of business comprises of providing any services and sales).
Classification of NBFC investment
and credit company NBFC -ICC investment and credit company NBFC
It means any company
which is a financial institution of carrying on as its principal of the business
asset finance the providing of finance whether by making loans or advances or
otherwise for any activity other than it is own and the acquisition of
securities and is not any other category of NBFC as defined by the bank in any
of its master directions systemically
important core investment company a CIC and as it is a type of
investment of a company which carries on the business of acquisition of shares
and securities with below the proportion:
v At least 90% of the
NBFCS total assets should be in the form of investments in equity shares
preference shares loan or debt in its group companies.
v The investment in
equity shares including all securities or instruments convertible into equity
within a period of not more than 10 years from the date of issue in the group
companies shouldn't be less than 60 percent of their total assets.
v The NBFC does not
trade in securities or loans of its group companies the only exception to this
as if such trading is done through a block sale place in the event of dilution
or disinvestment the company shall only carry the activities of investment in
bank deposits, government securities, money market instruments loans, and
investment in debt securities or guarantees on behalf of group companies.
v The minimum asset
size of such NBFC should be 100 crores this kind of NBFC can accept public
funds.
Infrastructure
finance company and the NBFC’s
The infrastructure of the finance company is a type of NBFC engaged in
the principal of business of providing infrastructure Loans. As per
RBI, NBFC can be registered as an infrastructure of the finance
company.
But you must full fill the following
conditions:
¨ Minimum 75% of the
total assets of the NBF C should be deployed in the infrastructure loans.
¨ The minimum net worth
of the company should be 300 crores.
¨ The CRAR (capital to
risk-weighted assets ratio) of the company should be at least 15% with a minimum
PRI capital at 10%.
¨ The minimum credit
rating of the company shall be A or equivalent of CRISIL are
equivalent to any other credit rating agency.
Infrastructure debt fund NBFC
¨ A debt fund is a pool
in which core assets are investments with fixed returns. This type of funds is
vital because of the fact that unless. Hence funding in the infrastructure the sector is complex as compared to other types of funding because of the volume
of investments required by the long maturity period and a period of funds
required in India.
¨NBFC Funding can be set up as a trust or a fund if it is set up as a trust then it shall be a mutual fund and shall be governed by the provisions are if NBFC is set up as a company. it would be categorized as an NBFC and shall be governed by the relevant provisions of RBI
Non-banking
financial company microfinance institution NBFCS
It is another type of non-deposit-taking NBFC which provides short-term
credit facilities to low-income groups an NBFC. it can be categorized as an
NBFC
It is a subject to the following conditions as:
Ø A minimum of 85% of
the assets of such institution are in the form of microfinance such
microfinance shall be provided subject to the following conditions Such as:
rural areas loans should be given to people with an income of 60,000, In urban
areas loans should be given to people with an income of 1,20,000 (such loans
should not exceed 50,000) the tenure of such loans should not be less than 24
months, such loans should be given without collateral. The borrower should be
given the choice of repayment on a weekly forth night or monthly basis.
Non-banking
financial company and NBFC factors
To finance the institution having the principal business of acquisition
of receivables on discount or financing against such receivables by way of
loans or advances or by the creation of security interest over such receivables
but excludes normal lending by a bank.
As per as RBI NBFC can be registered as an infrastructure finance
company subject to the condition that it should be an on deposit accepting a loan
company and must full fill the following conditions:
ü Minimum 75% of the
total assets of the NBFC should be deployed in the factoring business.
ü Minimum 75% of the
gross income of such NBFC shall be from factoring business.
ü The minimum net worth
of the company should be 5 crores.
How
NBFC's Are Different From A Bank.
Activities of an NBFC are similar to that of a bank, however, there are
some differences between the two as stated below:
ü An NBFC cannot accept
demand deposits.
ü NBFC's are not apart
of the payment and settlement system.
ü NBFC cannot issue checks
drawn on itself.
ü Unlike a bank deposit
insurance facility is not available to the depositors of NBFC's.
Prerequisites
For Obtaining A Certificate Of Registration Of NBFC From RBI.
Ø The applicant must be
a company registered under the Companies Act for the time being enforce the
company shall have a minimum NOF (Net own funds) of 2crores for an Indian
entity and 5crores for a foreign company or investors who wish to set up
an NBFC in India.
Ø At least one of the
directors who should be the whole-time director of the company should possess
experience in a similar field or should be an experienced banker.
Ø The Cibil records of
the companies should be free from any irregularities.
NBFC
Registration Process
v Complete all
mandatory documents and attachments of application
v Application (cosmos)
can be filled on the website of RBI.
v On successful
submission of the application, an application reference CAN is issued by the
RBI to the applicant to track the status of its application. Once the
application is received by the respective office the license of registration of
NB FC is granted by the RBI on a comprehensive and careful analysis of the
application.
Documents
For NBFC Registration
Certified copies of the certificate of incorporation of the company.
Certified copies of the main object clause of the memorandum of association of
the company. Board resolution copy a fixed deposit receipt and bankers
certificate indicating net operating fund.
The companies which are already in existence the following documents are
to be submitted:
ü Audited balance sheet
along with an extra
ü Profit and loss
statement
ü directors and
auditors report
ü bankers report
ü copy of the
certificate of highest educational and professional qualification in respect of
all the directors.
ü Copy of experience
certificate if any in the financial services sector including banking sector in
respect for all the directors.
* For Know About More NBFC Visit Our Resources.
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