2. S.No. Topics Covered
1 Definition & Background
2 NBFCs Vs. Bank
3 Registration, Formation and Commencement
4 Classification of NBFC
5 Why NBFC?
6 Sector Highlights
7 Avenue for CS Professionals
8 Return Requirements
9 Recent Amendments
10 NBFCs in India
11 Outcome: Revised Regulations
12 Suggestions
13 Conclusion
3. NON –BANKING FINANCIAL COMPANY
Section 45I (f) of RBI Act, 1934
A “Financial Institution” which is a
company;
A Non‐Banking Institution which is a
company and which has as its Principal Business the
receiving of deposits, under any scheme or
arrangement or in any other manner, or lending in
any manner;
Net Owned Funds
Requirement -
Min. 200 Lakhs unless specified
otherwise.
4. The Revised Regulatory Framework for
NBFCs enforced by RBI has plugged
the so called regulatory arbitrage and
brought parity
with banks.
NBFCs’ regulations have a history of 18
years and are today almost at par with
banks
5. Loans and Advances
Hire-Purchase
Acquisition of
Shares/Stocks/Debentures
/ Bonds/Securities
Leasing
Insurance Business
Chit Business
Agricultural Activity
Industrial Activity
Purchase or Sale of any
Goods (Other than
Securities)
Providing any Services
and Purchase/
Sale/Construction of
Immovable Property
6. Banks
– Maintain Demand
Deposits(savings/cur
rent Accounts)
-Banks have access to
low cost public
deposits
-Scope of Business is
Limited
– Form a Part of
Payment and
Settlement
Mechanism
NBFC
– Accept only Term
Deposits
-NBFCs have to rely
on Banks / financial
instruments to raise
funds
-Scope of Business is
Unlimited
– Does not form a
Part of Payment and
Settlement
Mechanism
7. Registration with RBI
for carrying on their
business.
Minimum Net Owned
Fund requirement of
Rs. 200 lakhs.
Application is to be
submitted in two
separate sets tied up
Properly in two files.
Annex 2 to be submitted
duly signed by the
director/Authorized
signatory and certified
by statutory auditors.
8. A company with main object clause/ancillary
clause for carrying out NBFI activities (check
object clause).
Obtain checklist of requirements from RBI
website and fill up prescribed form, available on
RBI website, according to instructions with the
requirements
Fill up the e‐form provided in excel format and get
the required certifications of the statutory
auditors/chartered accountants (as the case may
be)
9. Obtain the printout of successful submission
of the softcopy. Mention the date of
submission on the print if date is not
appearing on print.
Submit the hardcopy application in duplicate
to regional office of RBI, each page in the
application file should be numbered.
Prepare the application in triplicate so that a
replica is with the applicant for future
reference.
10. NBFC must
commence its
business within
6
months from the
date of CoR
If not
commenced
within 6 months,
CoR will
stand withdrawn
No change in
control prior to
commencement
of its business
Prior Approval
of RBI is
required for
change in name
NBFC
12. • Assets Finance Company
• Investment Company
• Loan Company
• Core Investment Companies
• Infrastructure Finance Companies
• Micro Finance Institutions
Types of NBFCs
(Assets based)
13. Why NBFC ???
Indian Financial System
Sectors Development
Address the Debt
Requirement
Credit to Retail Customers
Small Microfinance
Adapt Market Demand
Conditions
15. •Passing of Board Resolution under Section 179 of the
Companies Act, 2013
•Shareholders Resolution under Section 180(1)(a) and
Section 180(1)(c) of the Companies Act,2013
•Preferential issue – Section 42 of the Companies Act, 2013
and Rules made there under.
16. Compliance with applicable rules
& regulations of recognized stock
exchange in India
Compliance with the SEBI (Issue
of Capital and Disclosure
Requirements) Regulations, 2009
Compliance with the SEBI (Issue
and Listing of Debt Securities)
Regulations, 2008
Compliance with SEBI (Debenture
Trustee) Regulations, 1993
Issuance of Non‐Convertible
Debentures (Reserve Bank)
Directions, 2010, as issued by the
RBI (applicable if maturity period
is upto 1 year)
Non‐Banking Financial Companies
Acceptance of Public Deposits
(Reserve Bank) Directions, 1998
Master Circular on ECB Guidelines
Consolidated FDI Policy 2013
issued by DIPP
SEBI Laws RBI Laws
17. • NBFC – D : 7 types of return
• NBFC‐ND‐SI : 6 types of return
• NBFC – ND having asset size more than
50 crores and above but less than 100
crores :
quarterly return ‐ basic information (NoF,
profit & loss last 3 years etc.)
• NBFC with FDI : half yearly return on
compliance of Minimum Capitalization Norm
• NBFC having overseas investment :
Quarterly return
18.
19.
20. NBFC in India
Power Finance Corporation
Reliance Capital
Shree Global
Shriram Transport Finance
Bajaj Holdings
M & M Financials
Muthoot Finance
LIC Housing Finance
Tata Capital
Infrastructure Development
Finance Company
23. SUGGESTIONS
Opening new avenues
of fund raising like
creating a “refinance
window” would go a
long way
in reducing and
ultimately exiting of
NBFCs from deposit
acceptance.
RBI may stipulate a
cap whereby a
maximum of 50% of
total bank lending to
priority sector may be
routed through
NBFCs.
Systemically Important
NBFCs should be given
coverage under the
SARFAESI Act.
Recommended by the
Usha Thorat
Committee and the
Nachiket Mor
Committee.
(Already implemented)
24. Conclusion
To conclude, I may say that the challenge
therefore for the NBFC sector is to grow in a
prudential manner while not stopping altogether
on financial innovations.
In this scenario, the Non-Banking Finance
Companies (NBFC) sector has scripted a story
that is remarkable. Skepticism about ‘shadow
banks’ has settled to a more healthy
understanding of the risks and rewards of a
diverse financial system.
Thus the need for uniform practices and level
playing field for NBFCs in India is indispensable.
Conclus
ion
