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u Introduction
u Role of NBFC
u Classification of NBFCs
u Eligibility & Registration of NBFC
u Accepting Deposit mechanism of NBFC
u Prudential Norms on NBFCs
u FDI in NBFCs
ONon-Banking Financial Company (NBFC) is a company
registered under the Companies Act, 1956. and conducting
financial business as their principle business.ǯ
Any company engaged in the business of loans and
advances, acquisition of
shares/stock/bonds/debentures/securities issued by
Government or local authority or other securities of like
marketable nature, leasing, hire-purchase, insurance
business, chit business etc.

E.g: Sundaram Finance, Cholamandalam Investments, Bajaj

Finance Ltd.
 NBFCs are required as they have a greater reach to
various markets and have great efficiency in
mobilizing funds. Generally banks to reduce their
operational costs establish NBFC. NBFC enjoys many
liberal policies by RBI in comparison with the
commercial banks. However this scenario is
changing. RBI now has strict measures for NBFCs
also.
 All NBFCs are under direct control of RBI in India.
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uDevelopment of sectors like Transport & Infrastructure

uSubstantial employment generation
uHelp & increase wealth creation
uBroad base economic development
uIrreplaceable supplement to bank credit in rural segments
umajor thrust on semi-urban, rural areas & first time buyers /
users
uTo finance economically weaker sections
uHuge contribution to the State exchequer
 NBFCs are classified into two categories
uNBFC accepting deposits from customers
uNBFC which do not take deposits from customers

NBFCs

Accepting Not Accepting

Deposits Deposits
NBFC-D NBFC- ND
 NBFCs are doing functions akin to that of banks, however
there are a few differences:
NBFC cannot accept demand deposits
It is not a part of the payment and settlement system
Accept/renew public deposits for a minimum period of 12
months and maximum period of 60 months.
They cannot offer interest rates higher than the ceiling rate
prescribed by RBI from time to time. (Currently the ceiling
rate is 12.5%)
They should have minimum investment grade credit rating
from the credit rating agencies