Presentation On NBFCS: Submitted By: Manjoyt Kaur

PRESENTATION ON NBFCs
Submitted by: Manjoyt kaur
AGENDA
Definition of NBFCs Difference between Banks and NBFCs Types of NBFCs NBFCs Overview Services Provided Customer services Registration Regulations List of NBFCs in India
NBFCs
DEFINATION OF NBFCs
Non-bank financial companies (NBFCs) are financial institutions that provide banking services without meeting the legal definition of a bank, i.e. one that does not hold a banking license. These institutions are not allowed to take deposits from the public. Nonetheless, all operations of these institutions are still exercised under bank regulation.
NBFCs
DIFFERENCE BETWEEN NBFCS AND BANKS

1. NBFC cannot collect deposits in the manner of a bank. 2. NBFC cannot issue checks drawn on itself. 3. While banks are incorporated under banking companies act, NBFC is incorporated under company act of 1956.
NBFCs
TYPES OF NBFC
Asset finance Companies (AFC)
AFC are financial institutions whose principal business is of financing physical assets such as automobiles, tractors, construction equipments material handling equipments and other machines. Ex: Bajaj Auto Finance corp.
Investment Companies (IC)

ICs generally are involved in the business of shares, stocks, bonds, debentures issued by government or local authority that are marketable in nature. Ex: Stock Broking Companies.
Loan Companies (LC)

LCs are loan giving companies which operate in the business of providing loans. These can be housing loans, gold loans etc. Ex: Mannapuram Gold Finance, HDFC
NBFCs
SERVICES PROVIDED
NBFCs offer all sorts of banking services, such as loans and credit facilities, private education funding, retirement planning, trading in money markets, underwriting stocks and shares. These institutions also provide wealth management such as managing portfolios of stocks and shares, discounting services e.g. discounting of instruments and advice on merger and acquisition activities. The number of non-banking financial companies has expanded greatly in the last several years as venture capital companies, retail and industrial companies have entered the lending business. Non-bank institutions also frequently support investments in property and prepare feasibility, market or industry studies for companies. However they are typically not allowed to take deposits from the general public and have to find other means of funding their operations such as issuing debt instruments.
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CUSTOMER SERVICE
NBFCs provide prompt, tailor made service with least hassles. This more than compensates for the higher lending rates of NBFCs as compared to Banks & FIs All customers get direct and easy access to and individual attention of the top management NBFCs cater to a class of borrowers who :- Do not necessarily have a high income - But have adequate net worth - Are honest and sincere (gauged by the personal touch maintained with them).
NBFCs
REGISTRATION
A company incorporated under the Companies Act, 1956 and desirous of commencing business of non-banking financial institution as defined under Section 45 I(a) of the RBI Act, 1934 should have a minimum net owned fund of Rs 25 lakh (raised to Rs 2 crores w.e.f April 21, 1999). The company is required to submit its application for registration in the prescribed format along with necessary documents for Banks consideration. The Bank issues Certificate of Registration after satisfying itself that the conditions as enumerated in Section 45-IA of the RBI Act, 1934 are satisfied.
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CONDITIONS FOR REGISTRATION

The RBI may cancel the certificate of registration of NBFCs and cease to carry on the business in India. It has failed to comply with any condition subject to which the certificate was issued and it fails to submit for inspection and its Books of Accounts and other relevant documents when so demanded by an inspecting authority of RBI.
Cont..
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IN CASE A NBFC DEFAULTS IN REPAYMENT OF DEPOSIT WHAT COURSE OF ACTION CAN BE TAKEN BY DEPOSITORS?
If a NBFC defaults in repayment of deposit, the depositor can approach Company Law Board or Consumer Forum or file a civil suit to recover the deposits.
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REGULATIONS OF NBFCs
While NBFCs have been rendering many useful services, several unhealthy features of their working have also been observed. The protection of savers from Mal practices has been one of the important issues. The authority have evolved an appropriate regulatory framework to oversee the operations of NBFCs. At present all NBFCs except HFC are regulated by National House of Banking.
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REGULATIONS ON NBFC
The NBFCs are allowed to accept/renew public deposits for a minimum period of 12 months and maximum period of 60 months. They cannot accept deposits repayable on demand. NBFCs cannot offer interest rates higher than the ceiling rate prescribed by RBI from time to time. The present ceiling is 11 per cent per annum. The interest may be paid or compounded at rests not shorter than monthly rests. NBFCs cannot offer gifts/incentives or any other additional benefit to the depositors. They have to obtain a minimum credit rating from any credit rating agency.
NBFCs
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The RBI can direct them on their issues of credit and investment. NBFCs have 10- 15% of their deposits in liquid assets.
NBFCs
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IS IT NECESSARY THAT EVERY NBFC SHOULD BE REGISTERED WITH RBI?

In terms of Section 45-IA of the RBI Act, 1934, it is mandatory that every NBFC should be registered with RBI to commence or carry on any business of non-banking financial institution as defined in clause (a) of Section 45 I of the RBI Act, 1934. However, to obviate dual regulation, certain category of NBFCs which are regulated by other regulators are exempted from the requirement of registration with RBI viz. venture capital fund/merchant banking companies/stock broking companies registered with Sebi, insurance company holding a valid certificate of registration issued by IRDA, Nidhi companies as notified under Section 620A of the Companies Act, 1956, chit companies as defined in clause (b) of Section 2 of the Chit Funds Act, 1982 or housing finance companies regulated by National Housing Bank.
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LIST OF NBFCs IN INDIA

ABIRAMI FINANCIAL SERVICES (INDIA) LTD ABS LEASING & FINANCE ( INDIA ) LTD BAJAJ AUTO FINANCE LTD BANSAL MOTOR FINANCE LTD DECCAN FINANCE LTD GOBIND FINANCE & PROPERTIES PVT. LTD
NBFCs
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REFERENCES
www.rediff.com www.nbfc. org.in www.business-standards.com www.wikipedia.com www.nbfcrequirementsblogspot.com www.slideshare.com www.nbfc.com
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QUESTIONS
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THANK YOU
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Presentation On NBFCS: Submitted By: Manjoyt Kaur

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Presentation On NBFCS: Submitted By: Manjoyt Kaur

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PRESENTATION ON NBFCs

Submitted by: Manjoyt kaur

DIFFERENCE BETWEEN NBFCS AND BANKS

Investment Companies (IC)

Loan Companies (LC)

CONDITIONS FOR REGISTRATION

IS IT NECESSARY THAT EVERY NBFC SHOULD BE REGISTERED WITH RBI?

LIST OF NBFCs IN INDIA

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