NBFCs (Non-Banking Financial Companies) trend is emerging these days. It is not a bank, don’t bear a banking license at all! Even though most of our populace is going behind these Financial companies. What is peculiar about these NBFCs? What it can do and what not? Let’s see… Non- Banking Financial Companies are financial institutions offering banking services. These are registered under the Companies Act, 1956. As per RBI guidelines, NBFCs are only limited to supply business loans, shares, bonds, debentures, securities, mutual funds, etc. In India, these are governed under the banking statuary body i.e. Reserves Bank of India (RBI).
Institutions are restricted to raise deposits from individuals instead of issue Term debt/bonds/shares to fulfill the need. In India, NBFCs are contributing to the Indian economy in a great way. It gains the huge importance and becomes simple to find banking services under one roof. With the easy to go procedures, customer-oriented service, flexible terms, and pretty high rates of return; these are becoming a smart choice of all. For a company to be registered as NBFC, it is required to get the RBI authority a deposit raising to act like an institution. The first step is
- To register under The Companies Act, 1956.
- It should have at least owned 200 lakhs as NOF (Net owned Funds).
The process starts with the online application submitted along with all required details and documents on RBI Portal. If your details are right and contended under the RBI Act, 1934 then, they offer a registration certificate to the applicant company.
Classification of NBFCs:
Before application, deep study of classification of NBFCs, is required. There are some of the categories of NBFC Companies jotted down.Check and consider your category:
- Investment NBFCs: Investment company usually provides Stocks, Shares, Bonds, Financial Securities, etc. as their main function.
- Infrastructure Finance Company: These are a non-banking finance company helps in contributing leastwise 75 per cent of its total resources in infrastructure loans. These companies owned Net Owned Funds of Rs. 300 crore.
- Loan Company: These companies are financial institution engaged in offering loans or advances. Their principal job is to provide finance.
- Micro-Finance Institution: Such institutions typically engaged in micro finance activities.Such Institution don’t take deposits from the public.
- Infrastructure Debt Fund: Such NBFC are made to ease long term debt in infrastructure development plans. Minimum 5 year maturity period is there in producing debts.
- Other Important Investment Company: These NBFCs bears a resource over Rs.100 crores and typically takes deposits, works in issuing shares and various other securities.
- Asset Finance Company (AFC): Such companies or financial institution with its principal business is to supply finance for various physical assets like machines, vehicles, equipments, etc. used in industries.
Indian Non-Banking Financial Companies At The Top
Reliance Capital, Power Finance Corporation, The Infrastructure Development Finance Company, M & M Financials, LIC Housing Finance, National Bank of Agricultural and Rural Development, IFCI, JM Financial company, Muthoot Finance, Tata Capital, HDFC, Bajaj Holdings are some of the famous names of NBFCs working in India.
Role Of NBFCs In Indian Economy
In Indian economy, NBFCs playing a vital role in the growth of sectors like employment, transport and the most important, lending a strong hand to those belongs to poor minority financially. Moreover, these institutions guide lay person to clear their financial queries and remove the obstacles coming forth on their way to success.