Non-Banking Financial Company (NBFC)


NBFC is a company registered under the Companies Act, 1956 (now 2013) engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property. A non-banking institution which is a company and has principal business of receiving deposits under any scheme or arrangement in one lump sum or in installments by way of contributions or in any other manner, is also a non-banking financial company (Residuary non-banking company).

Differences with a bank:

(i) NBFC cannot accept demand deposits;
(ii) NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself;
(iii) deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks.
Different types of NBFCs are as follows:

(i) Asset Finance Company (AFC)
(ii) Investment Company (IC)
(iii) Loan Company (LC)
(iv) Infrastructure Finance Company (IFC)
(v) Systemically Important Core Investment Company (CIC-ND-SI)
(vi) Infrastructure Debt Fund
(vii) Non-Banking Financial Company - Micro Finance Institution (NBFC-MFI)
(viii) Non-Banking Financial Company – Factors (NBFC-Factors)
(ix) Mortgage Guarantee Companies (MGC)
(x) NBFC- Non-Operative Financial Holding Company (NOFHC)

Thursday, 08th Nov 2018, 06:32:36 PM

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