Non-Banking Financial Company

NON-BANKING FINANCIAL COMPANY

Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 2013 engaged in the business of loans and advances, acquisition of securities issued by the Government or local authority or other marketable securities e.g. hire-purchase, leasing, chit business or insurance business. If any institution having the main business of agriculture activity or in relation to any goods or immovable property, then it would not be termed as NBFC.

CRITERIA

  • Out of the total assets, 50 percent should be the financial assets and the income from such financial assets should be 50 percent of the gross income. The companies which fulfill such criteria will be registered by RBI and are also supervised and regulated by it.
  • The Company should be first registered under the Companies Act, 2013
  • The company should have a minimum net owned fund of ₹ 200 lakh

NBFC’S WORK SIMILAR TO BANKS BUT THERE IS A DIFFERENCE BETWEEN BANKS AND NBFC’S:

  • NBFC’s cannot accept demand deposits.
  • NBFC’s cannot issue the cheque drawn on itself.
  • Deposits in NBFC’s are not insured.

DEPOSIT TAKING NBFC’s

When the money is collected in any manner other than by the way of share capital, security deposit, earnest money deposit, advance consideration, loans from banks, financial institutions then such monies are termed as the deposits.

NBFC which has a certificate of registration can only accept deposits. If an NBFC without having a certificate of registration is found to be accepting deposits, then such NBFC would be liable for criminal action.

RETURNS TO BE SUBMITTED BY DEPOSIT TAKING NBFC’S

  • NBS-1 Quarterly return on deposit.
  • NBS-2 Quarterly return on Prudential Norms.
  • NBS-3 Quarterly return on Liquid Assets.
  • NBS-4 Annual return of critical parameters.
  • NBS-6 Monthly return on exposure to capital market.
  • Half – yearly ALM return
  • Branch Info return

RETURNS TO BE SUBMITTED BY DEPOSIT TAKING NBFC’s-ND-SI

  • NBS-7 Quarterly statement of capital funds, risk weighted assets, risk asset ratio etc.
  • Monthly return on important Financial Parameters.
  • ALM returns
  • Branch info return.