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    Day 6 Finance Task

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    apurva chaturvedi
    There are different types of NBFCs registered with RBI categorized based on their activities and liabilities. The main types are asset finance companies, investment companies, loan companies, infrastructure finance companies, core investment companies, infrastructure debt funds, microfinance institutions, factoring companies, mortgage guarantee companies, and non-operative financial holding companies.

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    Day 6 Finance Task

    Uploaded by

    apurva chaturvedi
    12 views3 pages
    There are different types of NBFCs registered with RBI categorized based on their activities and liabilities. The main types are asset finance companies, investment companies, loan companies, infrastructure finance companies, core investment companies, infrastructure debt funds, microfinance institutions, factoring companies, mortgage guarantee companies, and non-operative financial holding companies.

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    There are different types of NBFCs registered with RBI categorized based on their activities and liabilities. The main types are asset finance companies, investment companies, loan companies, infrastructure finance companies, core investment companies, infrastructure debt funds, microfinance institutions, factoring companies, mortgage guarantee companies, and non-operative financial holding companies.

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    © All Rights Reserved
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    Download as rtf, pdf, or txt
    12 views3 pages

    Day 6 Finance Task

    Uploaded by

    apurva chaturvedi
    There are different types of NBFCs registered with RBI categorized based on their activities and liabilities. The main types are asset finance companies, investment companies, loan companies, infrastructure finance companies, core investment companies, infrastructure debt funds, microfinance institutions, factoring companies, mortgage guarantee companies, and non-operative financial holding companies.

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    what are different types and categories of NBFC REGISTERED WITH RBI ?

    A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956
    engaged in the business of loans and advances, acquisition of shares / stocks / bonds /debentures /
    securities issued by Government or local authority or other marketable securities of a like nature,
    leasing, hire-purchase, insurance business, chit business but does not include any institution whose
    principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other
    than securities) or providing any services and sale/purchase/construction of immovable property. A non-
    banking institution which is a company and has principal business of receiving deposits under any
    scheme or arrangement in one lump sum or in installments by way of contributions or in any other
    manner, is also a non-banking financial company (reiduary non banking company)

    NBFCs lend and make investments and hence their activities are akin to that of banks; however there are
    a few differences as given below

    i. NBFC cannot accept demand deposits

    ii. NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on
    itself

    iii. deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to
    depositors of NBFCs, unlike in case of banking financial company (Residuary non-banking company)

    NBFCs are categorized a) in terms of the type of liabilities into Deposit and Non-Deposit accepting
    NBFCs b) non deposit taking NBFCs by their size into systemically important and other non-deposit
    holding companies (NBFC-NDSI and NBFC-ND) and c) by the kind of activity they conduct. Within
    this broad categorization the different types of NBFCs are as follows

    I. Asset Finance Company (AFC) An AFC is a company which is a financial institution carrying on as its
    principal business the financing of physical assets supporting productive / economic activity, such as
    automobiles, tractors, lathe machines, generator sets, earth moving and material handling equipments,
    moving on own power and general purpose industrial machines. Principal business for this purpose is
    defined as aggregate of financing real / physical assets supporting economic activity and income arising
    therefrom is not less than 60% of its total assets and total income respectively.

    II. Investment Company (IC) IC means any company which is a financial institution carrying on as its
    principal business the acquisition of securities,

    III. Loan Company (LC): LC means any company which is a financial institution carrying on as its principal
    business the providing of finance whether by making loans or advances or otherwise for any activity
    other than its own but does not include an Asset Finance Company.
    IV. Infrastructure Finance Company (IFC): IFC is a non-banking finance company a) which deploys at
    least 75 per cent of its total assets in infrastructure loans, b) has a minimum Net Owned Funds of ₹
    300 crore, c) has a minimum credit rating of ‘A ‘or equivalent d) and a CRAR (capital to risk weighted
    asset ratio) of 15%.

    V. Systemically Important Core Investment Company (CIC-ND-SI): CIC-ND-SI is an NBFC carrying on the
    business of acquisition of shares and securities which satisfies the following conditions:-

    (a) it holds not less than 90% of its Total Assets in the form of investment in equity shares, preference
    shares, debt or loans in group companies

    (b) its investments in the equity shares (including instruments compulsorily convertible into equity
    shares within a period not exceeding 10 years from the date of issue) in group companies constitutes not
    less than 60% of its Total Assets

    (c) it does not trade in its investments in shares, debt or loans in group companies except through block
    sale for the purpose of dilution or disinvestment

    (d) it does not carry on any other financial activity referred to in Section 45I(c) and 45I(f) of the RBI act,
    1934 except investment in bank deposits, money market instruments, government securities, loans to
    and investments in debt issuances of group companies or guarantees issued on behalf of group
    companies.

    (e) Its asset size is ₹ 100 crore or above

    (f) It accepts public funds

    VI. Infrastructure Debt Fund: Non- Banking Financial Company (IDF-NBFC) : IDF-NBFC is a company
    registered as NBFC to facilitate the flow of long term debt into infrastructure projects. IDF-NBFC raise
    resources through issue of Rupee or Dollar denominated bonds of minimum 5 year maturity. Only
    Infrastructure Finance Companies (IFC) can sponsor IDF-NBFCs.

    VII. Non-Banking Financial Company - Micro Finance Institution (NBFC-MFI): NBFC-MFI is a non-deposit
    taking NBFC having not less than 85% of its assets in the nature of qualifying assets which satisfy the
    following criteria

    a. loan disbursed by an NBFC-MFI to a borrower with a rural household annual income not exceeding ₹
    1,00,000 or urban and semi-urban household income not exceeding ₹ 1,60,000

    b. loan amount does not exceed ₹ 50,000 in the first cycle and ₹ 1,00,000 in subsequent cycles

    c. total indebtedness of the borrower does not exceed ₹ 1,00,000

    d. tenure of the loan not to be less than 24 months for loan amount in excess of ₹ 15,000 with
    prepayment without penalty

    e. loan to be extended without collateral


    f. aggregate amount of loans, given for income generation, is not less than 50 per cent of the total loans
    given by the MFIs

    g. loan is repayable on weekly, fortnightly or monthly instalments at the choice of the borrower

    VIII. Non-Banking Financial Company – Factors (NBFC-Factors): NBFC-Factor is a non-deposit taking


    NBFC engaged in the principal business of factoring. The financial assets in the factoring business should
    constitute at least 50 percent of its total assets and its income derived from factoring business should
    not be less than 50 percent of its gross income.

    IX. Mortgage Guarantee Companies (MGC) - MGC are financial institutions for which at least 90% of the
    business turnover is mortgage guarantee business or at least 90% of the gross income is from mortgage
    guarantee business and net owned fund is ₹ 100 crore.

    X. NBFC- Non-Operative Financial Holding Company (NOFHC) is financial institution through which
    promoter / promoter groups will be permitted to set up a new bank .It’s a wholly-owned Non-Operative
    Financial Holding Company (NOFHC) which will hold the bank as well as all other financial services
    companies regulated by RBI or other financial sector regulators, to the extent permissible under the
    applicable regulatory prescriptions.

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