Detailed Introduction to NBFC | Future of NBFC

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Non-Banking Financial Company
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Introduction to the NBFC
The meaning of NBFC is Non-Banking Financial
Company these companies are involved in
providing a wide range of financial services
which includes insurance, stock-broking, loans
for homes, machinery, mobile phones etc. they
even accept deposits from people, but they do not
provide conventional banking to them. NBFC is
defined as a company registered under Companies
Act, 2013 and also under RBI act 1934 under
section 45-IA.These type of companies provides
banking services without holding any banking
license.
Related Incorporation of NBFC in India under
Companies Act
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Nature and Type of NBFC

• Non-banking financial companies can be divided
  into two categories based on their character
  which is depository and non-depository. If a
  company does not take any deposits, then they are
  suffixed with ND. Example of the deposit-taking
  institution is thrift stores, loans provider.
• Investment Company
• Loan Companies
• Infrastructure Finance Company
• Infrastructure Debt Fund
• Microfinance Companies

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Future of NBFC
Non-banking Financial Companies in the Indian
economy is on the rise as they target those left
traditionally out by the banks. These companies
are tech-driven and may achieve 19 of credit
market by 2020.NBFC is hence the critically
important component of the financial system of
our economy. For a country like India which is
diverse and vast, the financial sector is the
fuel of the economy, and NBFCs are crucial links
of the economy delivering a different set of
services such as lending, Investment banking and
capital market operations. Non-banking financial
Company is a company registered under the
companies act 2013 1st 1956. These type of
company mostly engaged in the business of
lending, chit business, insurance business, and
acquisition of stocks, debentures and securities.
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Factors Contributing to Growth of Indian Economy

• Stress on public sector units (PSUs)
•  Latent credit deman
•  Digital disruption, especially for micro, small
  and medium enterprises
• (MSMEs) and small and medium enterprises (SMEs)
• Increased consumption
• Distribution reach and sectors where traditional
  banks do not lend

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Contribution of NBFC to Indian Economy

• Substantial employment generation
• Major thrust on semi-urban rural areas first
  time buyers or users
• To finance economically weaker sections
• Help and increase wealth creation
• Supplement bank credit to the rural segment of
  the Indian economy
• Economic development

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Applicability of SARFAESI Act for NBFC
The SARFAESI Act now extends to Non-Banking
Financial Companies. The Scope of the term
"Financial Institutions" has become more
extensive and included Non-Banking Financial
Institution in its ambit. Ministry of Finance has
notified 196 companies regarding their inclusion
in the definition after the amendment.
Power of NBFCs and Banks under SARFAESI Act

• Take possession of the assets which are
  hypothecated
• sell the assets which have been hypothecated If
  the borrower has already sold the asset to a
  third party, the third party can be ordered to
  surrender the asset

Related Difference between an NBFC and Bank
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Frequently Asked Questions

• What are the prerequisite of NBFC Registration
  Procedure?
• The minimum net owned funds of the company prior
  to registration should be 2 crores.
• The company should have clean cibil records.
• At least one of the directors appointed should
  have NBFC background or a senior banker should be
  appointed as a full-time director of the company.
• Why Register an NBFC?
• With recent amendment of the companies act, they
  brought NBFC under the purview of the financial
  institution under companies act 2013 and
  therefore now NBFC companies have got certain
  privileges similar to that of commercial banks.
  Any company operating as an NBFC needs to
  register themselves under the companies act and
  obtain the certificate of registration from RBI.
  If any company doesnt register itself and start
  operating as NBFC, a heavy amount of fine is
  levied and in certain cases leads to the minimum
  imprisonment of 6 months which can be extended.

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CONTACT INFORMATION
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