services without meeting the legal definition of a bank, i.e. does not hold a banking license.
Principal business of receiving deposits under any
scheme or arrangement or any other manner, or lending in any manner. SERVICES Suppliers of loans and credit facilities
Supporting investments in property
Trading money market instruments
Funding private education
Wealth management such as Managing portfolios
of stocks and shares Underwrite stock and shares
Retirement planning Advise companies in merger and acquisition
Prepare feasibility, market or industry studies for
companies
Discounting services e.g., discounting of instruments
DIFFERENCE BETWEEN BANKS AND NBFC’S NBFC cannot accept demand deposits.
It is not a part of the payment and settlement
system and as such cannot issue cheques to its customers.
Deposit insurance facility of DICGC is not
available for NBFC depositors unlike in case of banks. CLASSIFICATION Development finance institutions
Equipment leasing Company
Hire-purchase Company
Loan Company
Investment Company
Venture capital companies
REGULATIONS It is mandatory that every NBFC should be registered with RBI.
Requirements for registration:
A company incorporated under the Companies Act,1956
Desirous of commencing business of non-banking financial institution as defined under Section 45 I(a) of the RBI Act, 1934 The company is required to submit its application for registration. The bank issues certificate of registration after satisfying itself Only those NBFCs holding a valid certificate of registration with authorisation to accept public deposits can accept/hold public deposits.
Accept/renew public deposits for a minimum
period of 12 months and maximum period of 60 months NBFCs regulations which the depositor may note at the time of investment:
NBFCs cannot offer interest rates higher than the
ceiling rate prescribed by RBI from time to time.
It cannot offer gifts/incentives or any other
additional benefit to the depositors.
NBFCs (except certain AFCs) should have
minimum investment grade credit rating (MIGR). The deposits with NBFCs are not insured.
The repayment of deposits by NBFCs is not
guaranteed by RBI.
The NBFCs are allowed to accept/renew public
deposits for a minimum period of 12 months and maximum period of 60 months The Reserve Bank of India does not accept any responsibility or guarantee about the present position of the NBFCs.
A proper deposit receipt should be insisted.
The receipt shall be duly signed by an officer
authorised by the company in that behalf. THANK YOU !!