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“STUDY AND GROWTH OF NON BANKING FINANCIAL COMPANY”
A PROJECT SUBMITTED TO
UNIVERSITY OF MUMBAI FOR PARTIAL COMPLETION OF THE DEGREE OF
BACHELOR IN COMMERCE (FINANCIAL MARKETS)
UNDER THE FACULTY OF COMMERCE
BY
MR. ARJUN DEEPAK SINGH
UNDER THE GUIDANCE OF
MS. HARSHA HARDASANI
SMT. M.M.K COLLEGE OF COMMERCE & ECONOMICS

ADV, NARI GURSAHANI RD, T.P.S III, BANDRA(W) MUMBAI, MAHARASHTRA 400050
MARCH-2024
“STUDY AND GROWTH OF NON BANKING FINANCIAL COMPANY”
A PROJECT SUBMITTED TO
UNIVERSITY OF MUMBAI FOR PARTIAL COMPLETION OF THE DEGREE OF
BACHELOR IN COMMERCE (FINANCIAL MARKETS)
UNDER THE FACULTY OF COMMERCE
BY
MR. ARJUN DEEPAK SINGH
UNDER THE GUIDANCE OF
MS. HARSHA HARDASANI

MARCH-2024
ACKNOWLEDGMENT
To list who all have helped me is difficult because they are so numerous and the depth is so enormous.
I would like to acknowledge the following as being idealistic channels and fresh dimensions in the
completion of this project.
I take this opportunity to thank the University of Mumbai for giving me chance to do this project.
I would like to thank my Principal, Prof. CA. Kishore. S. Peshori for providing the necessary facilities
required for completion of this project
I take this opportunity to thank our Coordinator Harsha Hardasani for her moral support and guidance
I would also like to express my sincere gratitude towards my project guide ___________________ whose
guidance and care made the project successful.
I would like to thank my College Library, for having provided various reference books and magazines
related to my project.
Lastly, I would like to thank each and every person who directly or indirectly helped me in the
completion of the project especially my Parents and Peers who supported me throughout my project

CERTIFICATE
This is to certify that Mr Arjun Deepak Singh has worked and duly completed his Project Work for the
degree of Bachelor in Commerce (Financial Markets) Under Faculty of Commerce in the subject of
Financial Market and her project is entitled “ STUDY AND GROWTH OF NON BANKING
FINANCIAL COMPANY’’ under my supervision.
I further certify that the entire work has been done by the learner under my guidance and that no
part of it has been submitted previously for any Degree or Diploma of any University.
It is his own work and facts reported by his personal findings and investigations.
Seal of the college
Name and Signature of Guiding Teacher

External Examiner Signature
Date of submission:
Declaration by learner
I the undersigned Mr. Arjun Deepak Singh here by, declare that the work embodied in this project work
titled “STUDY AND GROWTH OF NON BANKING FINANCIAL COMPANY” forms my own
contribution to the research work carried out under the guidance of Ms Harsha Hardasani is a result of my
own research work and has not been previously submitted to any other University for any other Degree/
Diploma to this or any other University.
Wherever reference has been made to previous works of others, it has been clearly indicated as such and
included in the bibliography.
I. here by further declare that all information of this document has been obtained and presented in
accordance with academic rules and ethical conduct.
Name and Signature of the learner
Certified by
Name and signature of the Guiding Teacher
EXECUTIVE SUMMARY
We studied about banks, apart from banks the Indian financial system has large number of
privately owns, decentralized and small sized financial institutions known as Non- banking
financial companies (NBFC’s). In recent times, the non-banking financial companies have
contributed to the Indian economic growth by providing deposits facilities and specialized
credit to certain segment of the society such as unauthorized sector and small borrowers. In the
financial system, the NBFC’s plays very important role in converting services and provide to
credit unorganized sector and small borrowers.
NBFC’s provide financial services like hire-purchase, leasing, loans, investments, chit funds
companies etc. NBFC’s can be classified into deposit accepting companies and non-deposits
accepting companies. NBFC’s are small in size and are owned privately. The NBFC’s have
grown rapidly since 1990’s.
They offer attractive rate of return. They are fund based as well as serviced oriented
companies. Their main companies are banks and financial institutions. According to Reserve
Bank of India Act 1934, it is compulsory to register the NBFC’s with the Reserve Bank of
India. This research work also focuses on the non-banking financial services after COVID-19
pandemic.
TABLE OF CONTENTS
Chapter No. Topics Page No.
1 Introduction
2 Research Methodology
3 Literature Review
4 Data Analysis, Interpretation and

Presentation
5 Conclusion and Suggestions

CHAPTER 1
INTRODUCTION OF STUDY AND GROWTH ON NON-BANKING
FINANCIAL COMPANIES (NBFC’S)
Non-Banking Financial Companies (‘NBFCs’) are financial institutions which are not banks,
but they accept deposits and carryout functions similar to the banks. NBFCs started meanly in
India within the 1960s as an alternate for savers and investors whose financial needs weren't
sufficiently met prevailing by the banking industry. In a broader sense, NBFC means a
corporation whose principal business is financing, in whatever form, but not qualified enough
to be called a bank as defined in Banking Regulation Act, 1949. NBFCs offer a spread of
services. The service mixture of NBFCs has all dimensions-width, depth and consistency-the
three essential characteristics of any product mix. Width refers to variety, depth refers to home
in each variety and consistency refers to overall synergy of the service mix. With their
diversified structure and methods of business NBFCs are serving the economy during a sort of
ways.
KEY TAKEAWAYS
 Nonbank financial companies (NBFCs), also known as nonbank financial institutions (NBFIs) are
entities that provide certain bank-like financial services but do not hold a banking license.
 NBFCs are not subject to the banking regulations and oversight by federal and state authorities
adhered to by traditional banks.
 Investment banks, mortgage lenders, money market funds, insurance companies, hedge funds,
private equity funds, and P2P lenders are all examples of NBFCs.
 Since the Great Recession, NBFCs have proliferated in number and type, playing a key role in
meeting the credit demand unmet by traditional banks.
Growth and diversification of non-banking financial companies are integral parts of the event
process of the financial market of the economy. NBFCs and unincorporated bodies are competing
and complementing the services of economic banks since yester-years everywhere the planet
The NBFCs at first operated on a limited scale without making much impact on the financial
Industry. They accepted fixed deposits from investors and figured out leasing deals for giant
industrial organizations. In the first stages of development, the businesses Act regulated financing.
However, the unique and sophisticated nature of operations and with financial companies acting as
financial intermediaries, there was an Involve in separate regulatory mechanism.
Hence, Chapter III B was included within the Federal Reserve Bank of India Act, 1934, which
assigned the Bank with limited authorities to manage deposit-taking companies. Since then the
RBI has initiated measures to handle the NBFC sector.
The RBI accepted and applied that hire purchase and leasing companies could accept deposits
to the extent of their net owned funds, as per the key recommendations of James
S. Raj Study Group formed in 1975. The businesses were also required to take care of quick
assets within the sort of unencumbered approved government securities. Between the 1980s
and 1990s, NBFCs, with their customer-friendly reputation, began to draw in an enormous
number of investors. the amount of NBFCs rose smoothly from a mere 7000 in 1981 to around
30000 in 1992, which made the RBI feel the necessity to manage the industry. In 1992, the
RBI formed a Committee headed by the previous Chairman of Bank of Baroda, Mr. A. C.
Shah, to recommend measures for effective regulation of the industry. The Shah Committee's
recommendations also included most things from compulsory registration to the prudential
norms.
In January 1997 there have been huge changes within the RBI Act, 1934, especially the
Chapters III-B, III-C, and V of the Act seeking to place in situ an entire regulatory and
supervisory structure, which might protect and save the interests and also make sure
about the smooth functioning of Non-banking financial institutions .
In March 1996, there have been around 41,000 NBFCs in India and that they weren't
recognized as a separate class. However, thanks to the failure of a number of the institutions
the regulatory structure alongside the reporting and supervision was constricted by RBI.
Within the late 90s, sweeping changes were delivered to protect the interest of depositors and
ensuring the specified functioning of NBFCs.
After the amendment of the Act in 1997, the NBFCs have boosted significantly in terms of
operations, range of instruments and market products, technological advancement, among others. In
the last 20 years, the NBFCs have obtain prominence and added depth to the financial sector. In
August 2016, the union cabinet gave the go-ahead for foreign direct investment (FDI) under the
automated route in regulated NBFC
The capital specification was changed within the year 1999, NBFCs getting registered on or
after the issuance of notification dated April 21, 19991 were required to possess the minimum
net owned funds of ` 200 lakhs so as to commence the business of an NBFC. Thanks to snow
balling trend within the sector and to make sure that the expansion of the world during a
healthy and efficient manner various regulatory measures were taken for
recognizing the systemically important companies and getting them under the austere norms.
The NBFC-ND with asset size of ` 100 crores or greater were accepted to be systemically
important companies. During the FY 2011-12, two new class of NBFCs were introduced
videlicet, IDF and MFI.
Between 1980’s and 1990’s, NBFCs gained good ground and began to draw in an enormous
number of investors due to their customer friendly reputation. Since the times of
Liberalization, Privatization and Globalization (LPG, started in 1991), there has been a
mushrooming growth of NBFCs; the amount of NBFCs grew from a mere 7000 in 1981 to
around 30000 in 1992.This is often when the RBI felt that it had been becoming increasingly
onerous for it to manage the industry. In 1992, the RBI created a Committee lead by A. C.
Shah, former Chairman of the Bank of Baroda, to recommend measures for the effective
regulation of the industry. The Shah Committee gave its recommendations, which ranged from
compulsory registration to prudential norms.
January 1997 witnessed drastic changes within the RBI Act, 1934, especially the Chapters III-
B, III-C, and V of the Act with the elemental objective of sticking place an entire regulatory
and supervisory structure, aimed toward protecting the interests of depositors also as ensuring
the robust functioning of NBFCs.
In the period following the modification of the Act in 1997, the NBFCs have evolved
substantially in terms of operations, sort of market products and instruments, technological
sophistication etc. In the past twenty years the NBFCs have acquire much seriousness by
adding depth to the general financial sector. In light of the growing sense of NBFCs as a key
player in broadening the financial base of India, it generates paramount academic and research
interests to develop deep into its onset, growth and performance. In August 2016, the union
cabinet has given nod for foreign direct investment (FDI) under the mechanized way to
regulated NBFCs.
NBFCs are performing a significant role within the process of intermediation, especially in
areas where well- established financial entities aren't easily accessible to borrowers. They need
inspired small savers to take a position money in them, then they were tough enough to lend to
the borrowers.
In terms of Section 45-IA of the RBI Act, 1934, no NBFC can start or keep it up business of a
non-banking financial organization without
(a) Obtain a certificate of acceptance from the Bank and without having a Net Owned Funds
of ₹ 25 lakhs (₹ Two crore since April 1999). although, in terms of the powers given to the
Bank, to preclude dual regulation, certain categories of NBFCs which are regulated by other
regulators are omitted from the need of registration with RBI viz. risk capital Fund/Merchant
Banking companies/Stock broking companies registered with SEBI, insurance firm holding a
legalized Certificate of Registration provided by INSURANCE REGULATORY AND
DEVELOPMENT AUTHORITY, Nidhi companies as informed under Section 620A of the
businesses Act, 1956, Chit companies as defined in section
(b) of Section 2 of the Chit Funds Act, 1982, Housing Finance Companies handled by National
Housing Bank, stock market or a Mutual Benefit company.
1.1DEFINATION OF NBFC ACCORDING TO RESERVE BACK

OF INDIA
Definition for Non-Banking Financial Company, it carries functions like bank but it's not
actual bank. Federal Reserve Bank of India has defined NBFC as below. RBI has defined it in
systematic way, it's explained each term in detailed i.e. what's financial institution? What is
non-banking?
An NBFC may be a company registered under the businesses act, 1956 or Companies act, 2013
and is engaged within the Business of monetary Institution.
Section 45I (f) of the Reserve Bank of India act, 1934 describes “Non-Banking Financial
Companies” as-
1. A financial Institution which is a company;

2. A non-banking financial institution which is company and which has its principal business
the receiving of deposits, under any programme or arrangement or in any order manner,
or in lending in any manner;
3. Such other non-banking financial institution or category of such institution, as the bank
may, with the previous acceptance of the central government and by notification in the
Official gazette, specifically;
Section 45I(c) of the Reserve Bank of India act, 1934 clarifies the term “Financial
Institution” as
1. The financing, whether by way of making loans or advances or otherwise, of any

activities other than its own;
2. The possession of shares, stocks, bonds, debentures or securities issued by
government or local authority or other marketable securities of a-like nature;
3. Letting or delivering of any goods to a hirer under hire-purchase agreement as
defined in clause (c) of section 2 of the hire purchase act, 1972;
4. The carrying on of any class of business;
5. Managing, conducting or supervising, as foreman, agent or in any other capacity, of
chits or kooris as defined as any law which is for the time being in force in any state,
or in any business, which is alike thereto;
6. Collecting, for any purpose or under any scheme or arrangement by whatever name
called, monies in lump sum or otherwise, by way of subscription or by sale of units, or
other instruments or other any manner and awarding prizes or gifts, whether in cash
or kind, or disbursing monies in any other way, to persons from whom monies are
collected or to any other person, but does not include any other institution, which
carries on as its personal business:-
• Agricultural operations; or
• Industrial activity; or
• The purchase or sale of any goods (other than securities) or the providing of any
services; or
• The purchase, construction or sale of any stable or rooted property, so however, that
no other part of income of the institution is derived from the financing of the
purchases, constructions or sale of immovable property by other persons.
1.2 CHARACTERISTICS OF NBFC’S
NBFC is that the financial organization which is functioning as shadow for Banks. Banks are
mostly in consumer banking while NBFCs are working in many segments like they're into
consumer banking, corporate banking, wholesale banking, mortgage loans, private banking,
wealth management, and investment banking.
Incorporation of non-banking financial firm is important as they're small players who provide
loans, chit funds etc., as 70% of population comes from the agricultural a part of India. Many
companies have come to the fore ad registered themselves with RBI to achieve the status of
NBFC. NBFCs are integral a part of our Indian Economy and Financial Sector. Contribution
towards Indian economy from NBFC sector is increasing, recently it's been contributed 12.5%
towards GDP of Indian economy. This recent success of NBFC are often attributed to its lower
cost, swiftness in providing strong risk management services and their reach within the sector
where public sector banks don’t.
NBFCs provide business loans at basic eligibility criteria. They study and do analysis of the
financial status of company and verify the credibility of the borrower company on the idea of
parameters. These parameters include CIBIL score, ITR, Business background, assets quality,
management of the corporate, liquidity et al. . . .
Terms and conditions of the NBFCs are customer friendly due to which companies do
approach NBFCs for corporate loans instead of approach bank. Many NBFCs provides
unsecured business loans which don't require hypothecation of any collateral. For little
businesses, terms and conditions are very customer-friendly where it can avail those loans
easily.
Commercial loan interest rates of the NBFCs are very competitive in market. They supply
borrower moratorium period on the idea of terms and conditions of the lender. They need zero
prepayment charges and don’t have any hidden charges. They permit
borrowers to repay them as per their pocket i.e. lender offer multiple repayment tenor
options that borrower can choose between and may repay the loan.
1.2 DIFFERENCE BETWEEN BANKS AND NBFC’S
BASIC BANK NBFC’S
MEANING Banks are government NBFC is a company which

authorized financial gives services which are
intermediary which aims to similar to banking services
supply banking services to to people without holding a
customers. bank license.
REGESTERED UNDER Banks are registered under NBFC is registered under

company’s act 1956.
Banking regulation act,
1949
DEPOSIT Banks can accept and lend NBFC’S cannot lend and
deposits. accept deposits.
INVESTMENT In banks a foreign In NBFC, Foreign

investment is restricted up investment is permitted up
to a certain fixed limit. to 100 percent.
PAYMENT SYSTEM Payment and settlement is In NBFC, the payment

the key activity of banks. system is not a part of the
activity.
DEMAND DRAFT Bank can issue self- NBFC cannot issue self-
demand draft on itself. demand draft their own.
CHEQUE DRAWN Banks can draw a self- NBFC cannot draw self-
cheque by their own. cheque their own.
CREDIT CREDITORS Banks can create credit NBFC cannot do it.

through various financial
activities.
TRANSACTION Bank provides a range of NBFC does not provide
SERVICE transaction services. transaction services.
1.4 THE DIFFERENT TYPES OF NBFC ARE AS FOLLOW:
1.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 there from is not less than 60% of its
total assets and total income respectively.
2.Investment Company (IC): IC means any company which is a financial institution carrying on
as its principal business the acquisition of securities,
3.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.
4.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
5.Core Investment Company (CIC-ND-SI): CIC-ND-SI is an NBFC carrying on the business of
acquisition of shares and securities.
6.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.
50 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.
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 Rs 1,00,000 or urban and semi-urban household income not exceeding Rs 1,60,000;
Loan amount does not exceed Rs,000 in the first cycle and Rs 1, 00,000 in subsequent cycles;
Total indebtedness of the borrower does not exceed Rs 1, 00,000;
tenure of the loan not to be less than 24 months for loan amount in excess of Rs 15,000 with
prepayment without penalty;
Loan to be extended without collateral;
Aggregate amount of loans, given for income generation, is not less than 50 per cent of the total
loans given by the MFIs;

Loan is repayable on weekly, fortnightly or monthly installments at the choice of the borrower
7.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
8.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 Rs 100 crore.
9.NBFC- Non-Operative Financial Holding Company (NOFHC) - is financial institution throughwhich

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 prescription
1.5 Problems Plaguing in NBFCs
1.The decline in asset quality for select NBFCs has stemmed from cases where underwriters (a person or
company that underwrites an insurance risk) are inexperienced, or with limited understanding of the local
situation and dynamics that drive the demand for credit.
2.Misalignment in product offerings with customer needs: Small NBFCs, in an effort to capture markets,
have expanded into new geographic locations and diversified their product portfolio but are misaligned with
consumer needs. When products can’t get associated with consumer needs, they become outmoded.
3.Asset-liability mismatch: Several NBFCs are faced with a liquidity crunch (a time when cash resources are
in short supply and demand is high), liabilities maturing and coming up for payment faster than loans in the
same tenure.
4.Lack of a strong regulator, except for housing finance companies, is also one of the challenges faced by
NBFCs.
There are three primary drivers of the current risk aversion for NBFCs:
1. The first driver relates to short-term funding being used to finance long-term assets—an asset liability
mismatch (ALM).
a. For micro-finance, the average loan tenure ranges from eight to nine months, for commercial vehicle
finance it is 16 to 18 months, while for small business finance it is 12 to 16 months. Thus, the asset side
duration for these businesses is very short.
b .On the liabilities side, the duration either mirrors the asset side, or is longer, and generally ranges from
one to two years. Thus, these small to mid-sized NBFCs run a positive ALM mismatch.
c. Even in the case of affordable housing finance, where one would expect a wide ALM mismatch, low asset
duration for affordable housing financiers reduces the ALM gap to negligible. This is further aided by low
leverage (debt to equity ratio) and high capital adequacy.
2. The second cause of current risk aversion towards NBFCs has to do with refinancing or rollover* of short-
term capital market borrowings.
a.This concern is linked to the ALM issue, as a smooth rollover of shorter duration liabilities when assets are
of longer duration is key for business continuity.
3.The third cause for concern has to do with asset quality.
a.This primarily pertains to exposure of NBFCs to the real estate sector—either as builder funding or loan
against property (LAP).
1.6 NON BANKING FINANCIAL COMPANY QUALITATIVE FACTORS
a) Overview and Operating environment
Non-Banking Finance Companies (NBFCs) play an important role in the Indian financial market. While the
Reserve Bank of India (RBI) regulates both NBFCs and banks, there are some significant differences in the
regulatory treatment, with NBFCs being given greater flexibility in governance structure and operational
matters, and being allowed to lend independent of priority-sector targets and of statutory reserve
requirements. However, at the same time, there are regulatory restrictions on the bouquet of services that
NBFCs can offer and on their funding options. Normally NBFCs lend for vehicle loans, personal loans, loan
against property/shares, corporate loan, etc.
The operating environment has a significant bearing on an NBFC’s credit rating as it can impact its growth
prospects and asset quality quite considerably. In assessing the operating environment, also looked at is the
overall economic conditions, prospects of the industry related to the asset class being financed, and the
regulatory environment. For instance, in the case of a commercial vehicle (CV) financing NBFC, the level of
economic activity and freight rates are very important, just as the outlook on real estate is important for a
home finance company, from the perspective of both asset creation and asset quality.
For an NBFC, regulatory changes can significantly impact (either positively or negatively) credit losses. For
instance, the establishment of the credit information bureau has helped lenders take informed credit
decisions, while The Securitisation and Reconstruction of Financial Assets and Enforcement of Security
Interest Act, 2002 (SARFAESI) has helped them recover real estate backed loans more efficiently; at the
same time, recoveries from unsecured asset classes and vehicle loans have been hit with the regulator taking
a strict view of the recovery procedure followed by some financiers.
Intensity of competition has a significant bearing on the credit profile of an NBFC, given that the prevailing
or anticipated competitive intensity would influence the company’s growth prospects, earnings and
management strategy. Our evaluation focuses on the current level of competition as well as the attractiveness
of the segment for potential competition by assessing several factors including growth potential, entry
barriers and risk-adjusted returns.
b) Promoters
Ownership structure could have a key influence on an NBFC’s credit profile in that a strong promoter and
strategic fit with the parent can benefit an NBFC’s earning, liquidity and capitalisation, and hence its credit
profile. In assessing an NBFC’s ownership structure, the parameters examined include, among others: the
credit profile of the promoter, shareholding pattern of the NBFC, operational synergies of the NBFC with its
promoter, level of involvement of promoter in the NBFC and level of commitment, and track record of the
promoter in providing fund support.
c) Management quality
Quality of management, systems and policies, shareholder expectations and the strategy followed to manage
these expectations, and accounting quality are the foundation stones on which an NBFC’s credit risk profile
is built. The importance of these factors is even higher for a new NBFC, one with a shorter track record, or
one with a changing business profile. The composition of the board, frequency of change of CEO and the
organisational structure of the company are critically examined. The company's strategic objectives and
initiatives in the context of resources available, its ability to identify opportunities and track record in
managing stress situations are taken as positives. The extent of digitisation of the operations and adequacy of
the information systems used by the management are evaluated. The evaluation focuses on the adoption of
modern practices and systems, capabilities of senior management, personnel policies and extent of
delegation of powers.
d) Risk Management
A careful evaluation of the risk management policies of the NBFC is done as that provides important
guidance for assessing the impact of stress events on the liquidity, profitability, and capitalisation of the
company concerned. Also compared is the underwriting policies of the NBFC concerned with the best
practices in the industry to make an assessment of the company’s risk profile. The process of risk profiling
also involves evaluating the NBFC’s business sourcing practices (in-house vs. outsourced), besides its
recovery and monitoring systems.
e) Compliance with statutory requirements
The track record of the company in complying with regulatory requirements of RBI are
examined.
f) Accounting Quality
Consistent and fair accounting policies are a prerequisite for financial evaluation and peer group
comparisons. By virtue of being incorporated under the Companies Act, 1956, NBFCs are required to follow
the Accounting Standards prescribed by the Institute of Chartered Accountants of India. Further, the RBI has
also issued prudential norms for NBFCs specifying the accounting methods to be used for income
recognition, provisioning for bad and doubtful advances, and valuation of investments. In evaluating an
NBFC’s accounting quality, the review is made with regard to the company’s accounting policies, notes to
the accounts, and auditors’ comments in detail. Deviations from the Generally Accepted Accounting
Practices are noted and the financial statements of the NBFC adjusted to reflect the impact of such
deviations.
g) Size and Market Presence
For an NBFC, its franchise strength determines its capacity to grow while maintaining reasonable risk-
adjusted returns, and to maintain resilience of earnings, thereby facilitating predictability of its future
financial performance. It may be noted that an NBFC with a significant market share and a niche player can
both have a defensible franchise (The bigger company on the strength of its standing in the overall market
and the smaller one on account of its unique offering or its strong relationship with the key participants in
the credit chain of the target segment), which could in turn benefit their credit profile. As for size, typically it
is
seen in relation to an NBFC’s loan mix and has a bearing on the company’s competitive position, diversity,
credit risk concentration, stability of earnings, and financial flexibility.
1.7 NON BANKING FINANCIAL QUANTITATIVE FACTORS
a) Asset Quality
Asset quality plays an important role in indicating the future financial performance of an
NBFC. Asset quality holds the potential to affect earnings (higher NPAs could dilute the
yields and necessitate higher credit provisions) and capital (lower earnings could slow down
the internal capital generation or in extreme situations (loss) could weaken the capital).The
evaluation of asset quality begins with the examination of the NBFC’s credit risk
management framework. Assessment is also made of credit risk concentration, trend in
viability of customers, trend in delinquencies, Gross NPA percentage, Net NPA percentage,
and Net NPAs in relation to Net Worth. The NBFC's experience of loan losses and write
off/provisions are studied carefully. The percentage of assets classified into standard, substandard, doubtful
or loss and the track record of recoveries of the NBFC is examined closely. The portfolio diversification and
exposure to troubled industries/areas is evaluated to arrive at the level of weak assets. In assessing
diversification, the common factors include loan mix, portfolio granularity, geographical diversification and
borrower profile.Restructured assets in NBFC’s total exposure are closely examined to arrive at the potential
NPAs of the NBFC.
b) Resource Profile
Resource base of the NBFC is analysed in terms of cost and composition. Proportion of deposits
/loans/bonds in funding mix is examined. Deposit growth rates and their rollover rates are also analysed.
Average as well as incremental cost of funds is examined in the context of prevailing interest rate regime.
Ability of the NBFC to raise additional resources at competitive rates is examined critically.
c) Liquidity Management
It is important for an NBFC to maintain a favourable liquidity profile for the smooth functioning of its
funding activity (fresh asset creation) and to honour its debt commitments in a timely manner. It is also
important that an NBFC manage its interest rate risk, as the same could impact its future profitability. In
assessing an NBFC’s liquidity profile, the evaluation is done on the company’s policy on liquidity, the
maturity profiles of its assets and liabilities, the asset-liability maturity gaps, and the backups available to
plug such gaps. The evaluation also focuses on the diversity of the NBFC’s funding sources and their quality
(i.e. availability of these sources in a stress situation). The short term external funding sources in the form of
unutilized lines of credit available from banks, etc along with directed and other investments if any are
important sources of reserve liquidity.
d) Profitability
The purpose of the evaluation here is to assess the level of future earnings and the quality of earnings of the
NBFC concerned, which is done by looking closely at the interest spreads, fee income, operating expenses,
and credit costs. The evaluation of an NBFC’s profitability starts with the interest spreads (yields minus cost
of funds) and the likely trajectory of the same in the light of the changes in the operating environment, the
company’s liquidity position, and its strategy. The ability of the NBFC to complement its interest income
with fee income is also assessed. A large fee income allows greater diversification, which in turn can
improve the resilience of earnings, thereby improving an NBFC’s risk profile. After assessing the income
stream, the evaluation is done on the NBFC’s operating efficiency (operating expenses in relation to total
assets, and cost to income ratio) and compares the same with that of its peers. Finally, the credit costs are
estimated on the basis of the company’s asset quality profile, and the profitability indicators compared
across peers. Importantly, a very high return
on equity may not necessarily translate into a high credit rating, given that the underlying risk
could be very high as well, and being so it could be more volatile or difficult to predict.
e) Capital Adequacy
Capital Adequacy is a measure of the NBFC’s ability to meet its obligations relative to its
exposure to risk and also relates to the degree to which the NBFC’s capital is available to
absorb possible losses. It also indicates the ability of the NBFC to undertake additional
business. Riskiness of the product and granularly of the portfolio are factors that have a
significant bearing on the amount of capital required to provide the desired degree of
protection to an NBFC’s debt holders. The evaluation by Infomerics factors the conformity of
the NBFC to the regulatory guidelines on capital adequacy ratio. Higher proportion of Tier I
(core capital) in the overall capital is viewed favorably. During the rating process, the erosion
of capital arising out of additional provisioning for NPAs is examined. Also factored impact
of mark to market gains/losses from investment portfolio on capital adequacy.
f) Peer-group analysis
Infomerics also carries out peer comparison on each of the above discussed parameters with
the NBFC’s performance. Detailed inter-company analysis is done to determine the relative
strengths and weaknesses of the NBFC in its present operating environment and any impact
on it, in future. All relevant quantitative and qualitative factors are considered together, as relative weakness
in one area of the NBFC's performance may be more than adequately compensated for by
strengths elsewhere. However, the weights assigned to the factors are different for short term
ratings and long term ratings. The intention of long term ratings is to look over a business
cycle and not adjust ratings frequently for what appear to be short term performance
aberrations. The quality of the management and the competitiveness of the NBFC are of
greater importance in long term rating decisions

CHAPTER-2
RESEARCH METHODOLOGY ON NBFC
2.1OBJECTIVES
1.Understand the Performance of Different NBFC stocks
2.To Analyse the market of NBFC in India
3.To study the financial services of NBFC
4.Compare Different NBFC by its Performance
5.Fundamental Analysis on Different NBFC
2.2 SCOPE
1. The NBFC definition, however, extends beyond just these services. Non-banking financial
institutions in India, such as NBFCs, offer a wider scope of financial services, adapting to the
changing landscape of the financial sector. They have tapped into sectors of the market where
traditional banks have been less successful.
2. Understanding what is NBFC in India requires a nuanced view of its role and responsibilities. It’s
essential to realise that NBFCs, regulated by RBI, are an integral part of the country’s financial
system, catering to the underserved sections of the society.
3. Non-banking financial institutions in India, including NBFCs, offer a vast array of services
contributing to the economy’s health. Their scope extends to a wider reach, enabling more
individuals and businesses to avail themselves of financial services, thereby driving economic
growth.
4. It’s clear that NBFCs, with their varied types and broad range of functions, are set to play an even
more significant role in the future of India’s financial landscape. The symbiotic relationship
between NBFCs and banks ensures a holistic approach to financial services in the country, ushering
in a new era of financial inclusion and stability.
The Companies Selected Are :
Bajaj Finance Ltd
Cholamandalam Investment and Finance
Shriram Finance
Muthoot Finance
L&T Finance
2.3 LIMITATION OF THE STUDY
1. Data Availability: It can be difficult to obtain accurate and thorough data on NBFCs, particularly the
smaller or private ones.
2.Complexity of Regulatory Landscape: It is challenging to generalize findings due to the frequently

complex and jurisdiction-specific regulaty environment for NBFCs.
3. Dynamic Nature of the Sector: New goods, services, and technological advancements mean that NBFCs a
re always changing, which could soon render study findings obsolete
.
4.Diversity of NBFCs: It might be challenging to draw generalizations that apply to the whole industry due t
o the extensive diversity of NBFC categories (such as infrastructure finance, asset finance businesses, and mi
crofinance).
5. Limited Historical Data: Due to the fact that NBFCs are a relatively new phenomenon in comparison to tr
aditional banks, it may be difficult to analyze long-term trends based on the available historical data
2.4 METHODOLOGY OF THE STUDY

Qualitative Research
Focus: Deep understanding of behaviors, motivations, industry trends, and customer perceptions.
Methods: In-depth interviews: One-on-one discussions to explore individual experiences and

opinions about NBFCs.
Focus Groups: Facilitated discussions with small groups to gather insights on NBFC services,
challenges, and opportunities.
Case Studies: Analyzing specific NBFCs to understand their strategies, successes, and failures.
Content Analysis: Examining industry reports, news articles, and social media to track trends and
themes.
Quantitative Research
Focus: Numerical data analysis, statistical trends, large-scale patterns
Methods: Surveys and Questionnaires: Collecting structured data from customers, potential
customers, and industry stakeholders about NBFC usage, preferences, and satisfaction levels.
Financial Analysis: Analyzing financial ratios, balance sheets, and income statements to
understand an NBFC's profitability, liquidity, and risk profile.
Market Data Analysis: Analyzing industry growth rates, market share of different NBFCs, and
regulatory changes.
Experimental Research (less common in NBFC studies)
Focus: Establishing cause-and-effect relationships.
Methods: A/B testing: Comparing the effectiveness of different marketing campaigns or product
features on NBFC customer acquisition.
Controlled trials: Could be used to test the impact of a new lending program or risk assessment
model, but ethical and practical considerations can make this difficult.
How These Methods are Used to Study NBFC Growth
Market Understanding: Surveys and qualitative research helps understand customer needs, gaps in
current financial offerings, and potential areas of growth for NBFCs.
Competitor Analysis: Quantitative data helps compare NBFCs against each other, identifying
market leaders and under-served segments.
Regulatory Impact: Both qualitative and quantitative research are used to understand how
regulatory changes affect NBFC operations, risks, and how they could be adapting.
Product Development: Feedback through surveys and interviews help NBFCs design new products
and services tailored to specific needs.
Risk Management: Financial analysis and economic data models are used to quantify risks in loan
portfolios, investment holdings, and overall financial sustainability of NBFCs.
Important Considerations
Combining methods: Qualitative and quantitative research often provide the most comprehensive
understanding of NBFCs.
Data quality: Ensure reliable and representative data, especially for quantitative studies.
Ethical Considerations: All research, especially when dealing with customer data, should prioritize
confidentiality and informed consent.
CHAPTER-3
LITERATURE REVIEW
Deepak Kumar et.al (2017) The purpose of this piece is to provide a high-level introduction to the world of
Indian NBFCs. This article has covered topics like the total number of NFCs, the types of NFCs, the sizes of
their assets and businesses, where they are located, what kind of restrictions they are subject to, and so on.
There is a discussion about the issue and future potential of NBFCs in India.
Erik Feyen, et.al (2021) Financial intermediaries are a result of market imperfections like information
asymmetry and market forces like economies of scale and scope. Market structure is also affected by
frictions and tensions. While technical progress is nothing new to the world of finance, digital innovation has
brought about significant advancements in system connection, processing power and cost, and freshly
produced and useful data. These developments have reduced transaction costs and opened the door for new
types of businesses to compete. As the cost of sharing information and conducting transactions has
decreased because to technological advancements, financial services production has become amenable to
decentralization. Since financial services are now provided by a variety of specialists, customers may pick
and choose the options that best fit their needs. But even in this era of digital manufacturing, the same
economic dynamics hold true. Customer acquisition, financing, compliance activities, data, and capital are
just some of the numerous areas of financial services production that benefit from economies of scale and
scope and network effects (including trust capital). In spite of technological advancements, consumers still
have to spend a lot of money on searching and putting things together. These factors favour re-bundling and
provide an edge to major multi-product providers such as technology (big tech) companies who have
recently expanded into the financial services industry from adjacent areas. Policy concerns over
competitiveness, regulatory boundaries, and equal playing fields have arisen in response to the digitalization
of the financial services industry. A "barbell" result, with a few major suppliers and numerous specialized
businesses, is one possible conclusion in terms of competition, concentration, and market composition.
Authorities need to work together across financial regulation, competition, and industry regulating agencies
to handle trade-offs between stability and integrity, competition and efficiency, consumer protection and
privacy.
Prof. Chetan Jaikishan bhutada et.al (2022) In this context, "financial system" refers to the whole
ecosystem of financial institutions, technologies, and services. The aforementioned financial organizations
play a pivotal part in this system, which is focused on the marketing, distribution, and promotion of financial
commodities among the general populace. Banks and non-banking financial institutions are the two most
common forms of financial institutions in the nation. Financial institutions that are not banks serve a
narrower clientele than banks do. The stability of the international financial system was historically
dependent on banks. However, the nonbanking sector has gained prominence with the spread of
liberalization, privatization, and globalization. To that end, the present research expands upon earlier
attempts to look into many areas of the international non-banking business.
Chakrabarti et.al (2018) This chapter aims to do two things: (1) shed light on some of the key features and
changes in the Indian financial system, and (2) attempt to draw some broad connections between these two
topics by reviewing the existing literature and summarizing and outlining the broad contours of the work
around monetary transmission channels in India. The Indian financial markets have come a long way since
1991, but they are still not a reliable channel for monetary policy. Because of this, they do not provide
adequate competition to banks. This may shift with more liberalization, such as the amendments
recommended by the FSLRC.
Balachandran (2006) studied about the NBFCs and have observed that in the financial markets, different
financial products that are available, provide an effective credit and payment system and thus they facilitate
the channelizing of funds from savers to investors in our nation. The researcher also pointed in the study that
the growth of NBFCs in the year 1981 was 700 which increased to 40000 in the year 1995 and finally
concluded that the deposits ofthe NBFCs are growing at an increasing rate than other financial institutions
and thereby the NBFCs can play a crucial role in Indian financial system. Mohan (2009) examined the
contribution of financial inclusion to achieve the greater economic growth. The study also highlighted that
India has a lower rank in financial depth and India’s rural economy has shifted towards more
commercialized sector. Therefore, it is very important to include the people in the folds of financial services.
The study concluded that financial inclusion will help in further development of India’s financial system and
promotion of economic growth.
RBI Bulletin (2015), stated that the NBFC sector of our nation has shown a tremendous growth in recent
years which are generically different from other public sector banks and shadow banks operating elsewhere
around the globe.
According to the report, it was also found out that the financial performance of our NBFCs are improving
day by day and also they are emerging as an Important source of financing credit to infrastructure sector and
to micro, small and medium enterprises.
Kumar, July 1, 2020 b: The pandemic created lockdown has led to worsening conditions for
NBFCs ,especially that of the private sector and the low rated ones. The news report also studied that the
several liquidity measures taken by the Reserve Bank of India have got a remedial impact on financial
institutions and markets but the stress due to the pandemic was still there in certain areas. It also revealed
that there is a need to ensure the flow of credit to the NBFC sector with certain credit backstop within the
system.
Chhibber (2021) studied and observed that Indian NBFCs assumed critical importance in the financial
system in last few years. The researcher found that the credit to MSMEs by the NBFCs grew at a rate of 12
percent year on year in June 2019 and the researcher also stated that mutual funds reduced the exposure of
the NBFC sector very much in the year 2018. The study also highlighted that over the years various
measures have been taken by the government of our country to create demand and thereby to generate
liquidity in the market such that the banking sector of our nation lend further to the NBFC sector under
different schemes.
Chapter no 4
DATA ANALYSIS AND INTERPRETATION
4.1 ECONOMIC OVERIEW OF NBFC COMPANIES
NBFCs (Non Banking Financial Companies) play an important role in promoting inclusive growth in the
country, by catering to the diverse financial needs of bank excluded customers. Further, NBFCs often take
lead role in providing innovative financial services to Micro, Small, and Medium Enterprises (MSMEs) most
suitable to their business requirements. NBFCs do play a critical role in participating in the development of
an economy by providing a fillip to transportation, employment generation, wealth creation, bank credit in
rural segments and to support financially weaker sections of the society. Emergency services like financial
assistance and guidance is also provided to the customers in the matters pertaining to insurance.
NBFCs are financial intermediaries engaged in the business of accepting deposits delivering credit and play
an important role in channelizing the scarce financial resources to capital formation. They supplement the
role of the banking sector in meeting the increasing financial needs of the corporate sector, delivering credit
to the unorganized sector and to small local borrowers. However, they do not include services related to
agriculture activity, industrial activity, sale, purchase or construction of immovable property. In India,
despite being different from banks, NBFC are bound by the Indian banking industry rules and regulations.
NBFC focuses on business related to 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. The banking sector would always be the most important sector
in the field of business because of its credibility in supporting manufacturing, infrastructural development
and even being the backbone for the common man's money. But despite this, the role of NBFCs is critical
and their presence in a country would only boost the economy in the right direction.
4.2 COMPANY OVERVIEW- BAJAJ FINANCE LTD
Bajaj Finance Limited (BFL) is an Indian non-banking financial company headquartered in Pune.
It is one of the leading non-banking financial companies (NBFCs) of India with a customer base of 73
million and holds assets under management worth ₹270,050 crore (US$34 billion).As per the 2023 list of
NBFCs issued by the Reserve Bank of India, Bajaj Finance Limited holds the second position in the upper
layer based on scale-based regulation guidelines.
Originally incorporated as Bajaj Auto Finance Limited on March 25, 1987, as a non-banking financial
company, primarily focused on providing two and three-wheeler finance.After 11 years in the auto finance
market, Bajaj Auto Finance Ltd launched its initial public issue of equity share and was listed on the
Bombay Stock Exchange and National Stock Exchange of India.At the turn of the 20th century, the company
ventured into the consumer durables finance sector and started offering small-size loans at zero interest
rates.In the subsequent years, Bajaj Auto Finance diversified into business and property loans as well.
In the year 2006, the company's assets under management hit the ₹1,000 crore (US$130 million) crore mark
and are currently at ₹52,332 crore (US$6.6 billion). 2010 saw the company's registered name change from
Bajaj Auto Finance Limited to Bajaj Finance Limited.[citation needed]
By 2015, BFL was known to be the first in the industry to set up a series of Disaster Recovery (DR) data
centers that ensure business continuity for customer acquisition, loan processing, and servicing.
Additionally, by 2020, it started using data analytics and various big data tools to maintain its competitive
position.
As of June 2022, Bajaj Finance has been working with RBL Bank and DBS Bank to issue co-branded credit
cards. But, after the Reserve Bank of India opened the door for non-banking financial companies to enter the
credit card industry, the company plans to introduce its credit card products by the beginning of the first
quarter of 2023.
In January 2023, the company released its long-term strategy (LRS) to guide growth through different online
and offline products. Under that strategy, Bajaj Finance launched its loan against property (LAP) business
for micro, small, and medium-sized enterprise (MSME) customers, and has plans to launch new auto loans
in the second quarter of 2024, microfinance in the fourth quarter of the same year, and tractor financing in
the first quarter of 2025.By 2020, 60% of Bajaj Finance's workload was on cloud and originally, they aimed
to create a super-app for existing customers, but due to COVID-19 pandemic in India, they expanded the
plan to encompass various services by integrating five proprietary marketplaces within their ecosystem—
EMI store, insurance, mutual funds, broking, and health.
As of March 2023, the company deals in consumer lending, SME (small and medium-sized enterprises)
lending, commercial lending, rural lending, deposits, and wealth management.And, across 3800 towns,it has
294 consumer branches and 497 rural locations with over 33,000+ distribution points and 1,50,000+ stores.
In the year 2021, an analysis using Spearman's rank correlation coefficient was conducted to examine the
relationship between revenue factors and non-performing assets (NPA) parameters in Indian non-banking
financial companies. Specifically, when studying Bajaj Finance, it was observed that there existed a
statistically significant positive correlation between revenue and gross NPA (P<0.04), profit after tax (PAT)
and gross NPA (P<0.04), as well as return on assets (ROA) and gross NPA (P<0.005), with a negative
correlation found in the latter case. Additionally, a similar study from Indian Institute of Management
Bangalore noted the company's efforts in expanding its geographical reach, focus on product innovation, and
emphasis on cross-selling as key contributors to its NPA performance.
In a study conducted in 2023, examining 30 companies listed on the Bombay Stock Exchange, which was
subsequently published in the European Economic Letters journal, it was found that Bajaj Finance stock
reached a maximum average return of 58.58%.
This indicates a significant level of variability among the stocks over the past decade. The maximum average
return surpasses the mean return of 13.70% by over four times, highlighting the substantial influence of
Bajaj Finance's average return on the overall mean return.For FY23, the company reported a 62% increase in
profit after tax to ₹10,290 crore (US$1.3 billion), driven by a 30% increase in net interest income to
₹26,401 crore (US$3.3 billion)
The parent company, Bajaj Finserv Limited, holds 52.49% of the total shares and has a controlling stake in
the subsidiary.[21] Other major investors include Maharashtra Scooters Limited, the Monetary Authority of
Singapore-Government of Singapore, Nomura Securities, BNP Paribas, Smallcap World Fund INC, and
AXIS Long Term Equity Fund.According to an exchange filing in June 2023, the company's assets under
management reached approximately ₹270,050 crore (US$34 billion), reflecting a 32% increase from
₹204,018 crore (US$26 billion) recorded earlier on June 30, 2022
In 2017-18, Bajaj Finance acquired a 12.6 percent interest in the mobile wallet company MobiKwik. Bajaj
Finance and Sequoia Capital India had planned to sell MobiKwik shares worth around ₹69 crore (US$8.6
million) and ₹95 crore (US$12 million), respectively, through an Initial Public Offering in 2021, which has
been postponed due to the poor economic conditions In November 2022, Bajaj Finance announced its
intention to acquire Mumbai-based SnapWork Technologies for ₹93 crore (US$12 million) through a
combination of primary and secondary transactions. The acquisition was anticipated to be completed before
31 December 2022.
SHAREHOLDING PATTERN
Mar-19 Mar-20 Mar-21 Mar-22 Mar-23

Promoters + 55.17% 56.20% 56.12% 55.86% 55.91%
FIIs + 20.67% 21.16% 24.06% 21.41% 19.16%
DIIs + 8.50% 10.89% 9.08% 11.22% 12.92%
Government
0.00% 0.00% 0.00% 0.00% 0.07%
+
Public + 15.47% 11.46% 10.57% 11.15% 11.75%
Others + 0.19% 0.29% 0.17% 0.36% 0.17%
No. of 1,68,42 3,54,90 4,64,39 7,18,63 8,90,70
Shareholders 0 1 4 8 6
PIE CHART OF SHAREHOLDING PATTERN OF 2023

0%
12%
13%
56%
19%
PROMOTERS FIIs DIIs PUBLIC GOVERNMENT OTHERS
Mar- Mar- Mar- Mar- Mar- INTERPRETATION

19 20 21 22 23
18,48 26,37 26,67 31,64 41,39
Revenue
7 4 3 1 8
12,70
Interest 6,723 9,608 9,519 9,855
1
10,83 11,88 12,68
Expenses + 5,454 9,159
9 0 0
16,01
Financing Profit 6,310 7,608 6,314 9,906
8
Financing Margin
34% 29% 24% 31% 39%
%
Other Income + 13 9 3 -17 -4
Depreciation 144 295 325 385 485

15,52
Profit before tax 6,179 7,322 5,992 9,504
8
PROFIT & LOSS
Tax % 35% 28% 26% 26% 26%
OF BAJAJ
11,50
Net Profit + 3,995 5,264 4,420 7,028 FINANCE LTD
8
116.0 190.0
EPS in Rs 69.12 87.48 73.35
9 7
Dividend Payout
9% 11% 14% 17% 16%
%
GRAPH OF PBT
2023
15528
2022
9504
2021
5992
2020
7322
2019
6179
0 2000 4000 6000 8000 10000 12000 14000 16000 18000
Column1 Column2 Series 1
BALANCE SHEET OF BAJAJ FINANCE

Equity Capital 115 120 120 121 121
Reserves 19,582 32,208 36,798 43,592 54,251
1,01,58 1,29,80 1,31,63 1,65,23 2,16,69
Borrowings + 8 6 4 2 0
Other Liabilities
+ 2,948 2,257 2,918 3,562 4,166
1,24,23 1,64,39 1,71,47 2,12,50 2,75,22
Total Liabilities 3 1 0 6 9
Fixed Assets + 695 1,321 1,316 1,716 2,308
CWIP 0 0 51 34 80
Investments 8,599 17,544 18,397 12,246 22,752
1,14,93 1,45,52 1,51,70 1,98,51 2,50,08
Other Assets + 9 6 7 0 9
1,24,23 1,64,39 1,71,47 2,12,50 2,75,22
Total Assets 3 1 0 6 9
INTERPRETATION
The profit before tax of bajaj fianace has been increase rapidly in 2023 to 15,528cr
from 2022 i.e 9,504cr
4.3 COMPANY OVERVIEW- Cholamandalam Investment and Finance Company Ltd

Cholamandalam Investment and Finance Company Limited (CIFCL) is an Indian financial and investment
service provider with headquartered in Chennai, India. The company has 1029 branches across the country.
It is one of the 28 businesses under the Murugappa Group. It employees over 7,000 employees and also
has about 16,000 people who assist in various business activities, with the majority being in smaller towns.
As of 2019, the company had total assets under management at Rs 54,279 crore with a Net income of Rs
1,885.34 crore.The company was ranked 9th among the top 50 NBFCs in India by The Banking and Finance
Post.
SHARE HOLDING PATTERN
Mar- Mar- Mar-

Mar-22 Mar-23
19 20 21
Promoters 53.06 51.65 51.62
51.55% 51.47%
+ % % %
18.94 12.21 16.49
FIIs + 17.61% 19.63%
% % %
16.98 27.03 24.43
DIIs + 23.00% 21.45%
% % %
11.02
Public + 9.11% 7.46% 7.84% 7.44%
%
No. of 1,20,06 1,21,18
46,644 68,625 86,296
Shareholders 9 4
7.44
21.45
51.47
19.63
1PROMOTER FLLs DLLs PUBLIC
INTERPRETATION
PROFIT & LOSS OF Cholamandalam Investment and Finance Company Ltd

Mar- Mar- Mar- Mar- Mar-
19 20 21 22 23
7,10 8,71 9,58 10,14 12,88
Revenue
8 2 3 8 4
3,58 4,59 4,57
Interest 4,298 5,748
8 2 6
1,63 2,42 2,91
Expenses + 2,926 3,621
2 1 3
1,88 1,69 2,09
Financing Profit 2,924 3,515
8 9 4
Financing Margin
27% 20% 22% 29% 27%
%
Other Income + 1 0 56 84 220
Depreciation 57 111 102 101 121
1,83 1,58 2,04
Profit before tax 2,908 3,615
2 8 8
Tax % 35% 34% 26% 26% 26%
1,19 1,05 1,52
Net Profit + 2,154 2,665
7 4 1
15.3 12.8 18.5
EPS in Rs 26.23 32.42
2 6 5
Dividend Payout
8% 13% 11% 8% 6%
%
GRAPH OF PBT
Chart Title
2023
3,615
2022
2,908
2021
2,048
2020
1,588
2019
1,832
0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000
Series 3 Series 2 Column1
BALANCE SHEET OF Cholamandalam Investment & Finance Company Ltd

Equity Capital 156 164 164 164 164
Reserves 6,052 8,036 9,436 11,605 14,182
Preference
Capital 0 0 0 0 0
Borrowings + 50,567 55,005 63,730 69,174 97,358
Other Liabilities
+ 715 853 1,314 1,536 1,923
1,13,62
Total Liabilities 57,490 64,058 74,644 82,478 7
Fixed Assets + 167 283 228 259 403

CWIP 14 11 10 37 60
Investments 42 33 1,583 2,055 3,562
1,09,60
Other Assets + 57,267 63,732 72,823 80,127 2
1,13,62
Total Assets 57,490 64,058 74,644 82,478 7
INTERPRETATION
The profit before tax of Cholamandalam Investment & Finance Company Ltd has been increase rapidly in
2023 to 3,615cr from 2022 i.e 2,908cr
4.3 COMPANY OVERVIEW- SHRIRAM FINANCE
Shriram Group is an Indian conglomerate headquartered in Chennai. It was founded on 5 April 1974 by R.
Thyagarajan,[3] AVS Raja and T. Jayaraman.[4][5][6] The group had its beginning in chit funds business and
later on entered the lending and insurance businesses.
Shriram Finance is the flagship company of the Group which provides financial services such as commercial
vehicle finance, passenger vehicle finance, SME finance and retail lending (personal loans, gold loans and two-
wheeler loans).It is formed in 2022 as the result of a merger of Shriram City Union Finance and Shriram
Capital into Shriram Transport Finance
Shriram Housing Finance is a subsidiary of Shriram Finance and mainly provides home loan services.
Shriram Life Insurance is the life insurance arm of the group, and a joint venture between Shriram Group and
South African company Sanlam.
Shriram General Insurance is engaged in commercial and retail vehicle insurance, home insurance and travel
insurance. It is a joint venture between Shriram Group and Sanlam.
Shriram Financial Ventures is the holding company and promoter of Shriram Group's financial services and
insurance businesses. It is jointly owned by Shriram Ownership Trust (SOT) and Sanlam Group.
Shriram Properties is a real estate developer focusing on mid-income housing projects, primarily in South
India. Shriram Fortune is the financial services distribution arm of the group.
Shriram AMC is an asset management company focused on mutual funds.
Shriram Insight is a retail stockbroker.Shriram Wealth provides wealth management advisory services.Shriram
Automall is a vehicle auction platform started as a subsidiary of Shriram Transport Finance. In 2018, CarTrade
acquired a majority stake in Shriram Automall.

19 20 21 22 23
Promote 26.0 26.2 26.4 26.45 25.5

rs + 8% 5% 8% % 1%
50.9 64.6 61.0 53.88 49.7

FIIs +
4% 6% 1% % 8%
3.89 2.70 6.87 13.99 11.7

DIIs +
% % % % 4%
19.0 6.39 5.64 5.68 12.9

Public +
9% % % % 6%
No. of 51,5 56,4 78,3 1,00, 99,2

Sharehold
76 93 48 926 12
ers
12.96
25.51
11.74
49.78
INTERPETATION
PROFIT & LOSS OF SHRIRAM FINANCE

19 20 21 22 23
15,53 16,56 17,42 19,25 30,49

Revenue
6 1 2 5 2
12,98
Interest 7,564 8,313 9,089 9,773
7
Expenses + 4,171 4,683 4,932 5,816 8,706
Financing Profit 3,801 3,565 3,402 3,666 8,799

Financing Margin
24% 22% 20% 19% 29%
%
Other Income + 20 14 14 18 16
Depreciation 43 141 137 135 601
Profit before tax 3,778 3,439 3,278 3,549 8,214
Tax % 32% 27% 24% 24% 27%
Net Profit + 2,576 2,512 2,499 2,721 6,020
101.7 100.5 160.5

EPS in Rs 99.26 88.52
7 9 4
Dividend Payout
11% 5% 18% 20% 22%
%
GRAPH OF PBT
Chart Title
2023
8,214
2022
3,549
2021
3,278
2020
3,439
2019
3,778
0 1,000 2,000 3,000 4,000 5,000 6,000 7,000 8,000 9,000

BALANCE SHEET OF SHRIRAM FINANCE
Equity Capital 227 227 253 271 374
Reserves 15,736 17,915 21,464 25,824 43,138
Borrowings + 87,914 94,735 1,06,546 1,14,846 1,64,804
Other Liabilities + 1,542 1,389 1,647 1,328 2,256
Total Liabilities 1,05,419 1,14,266 1,29,910 1,42,268 2,10,573
Fixed Assets + 147 489 437 418 3,714
CWIP 0 0 0 0 66
Investments 4,126 2,936 3,347 6,971 7,430
Other Assets + 1,01,146 1,10,841 1,26,126 1,34,879 1,99,363
Total Assets 1,05,419 1,14,266 1,29,910 1,42,268 2,10,573
INTERPRETATION
The profit before tax of SHRIRAM FINANCE has been increase rapidly in 2023 to 8,214cr from 2022 i.e
3,549cr
4.4 COMPANY OVERVIEW – MUTHOOT FINANCE
Muthoot Finance Ltd is an Indian financial corporation and the largest gold loan NBFC in the country. In
addition to financing gold loans, the company offers other forms of loans, insurance and money transfer
services, and sells gold coins. The company is headquartered in Kochi, Kerala and operates over 5000
branches throughout the country. Outside India, Muthoot Finance is established in the UK, the US, and the
United Arab Emirates.The company falls under the brand umbrella of the Muthoot Group. Its stocks are listed
on the BSE and NSE since its initial public offering in 2011. The target market of Muthoot Finance includes
small businesses, vendors, farmers, traders, SME business owners, and salaried individuals.
Corporate backgroundThe company was incorporated as a private limited company on 14 March 1997 with the
name "The Muthoot Finance Private Limited" under the Companies Act. On 18 November 2008, the company
was converted into a public limited company with the name "Muthoot Finance Limited".During the year 2009–
10, the company added 620 new branches.In 2014, Muthoot Finance acquired a majority stake in Asia Asset
Finance plc, a Sri Lankan publicly-listed financial services company.In July 2016, Muthoot Finance acquired
46.83% of the capital of Belstar Investment and Finance Private Limited (BIFPL).In May 2018, Muthoot
Finance acquired Muthoot Money, a Non Deposit taking Non-Banking Financial Company.
Awards and recognition Muthoot Finance won the Skoch Financial Inclusion Award 2013[13] in recognition
of its major initiative in the area of 'Access to Banking and Financial Services' to the aam aadmi who had been
excluded from the country's banking network for decades.In 2012, Muthoot Finance was voted the most
trusted finance brand in India according to the Brand Trust Report 2012, a study conducted by Trust Research
Advisory. In the Brand Trust Report 2013 however, Muthoot Finance was voted second-most trusted finance
brand in India, but it regained its place as India's most trusted finance brand in the Brand Trust Report 2014.
In 2012, the company won the Asian Sustainability Leadership Award[18] for "Best Rural Outreach.BFSI
Award for the "Most Admired Loyalty Program" in 2012 at The Asian Leadership Awards heald at
Dubai.Golden Peacock Award for CSR being conferred upon Muthoot Finance Ltd. in the financial services
sector at the 7th International Conference on Social RESPONSIBILITY at the Dubai Global Convention
2012In 2013 company won the Golden Peacock Award "HR Excellence for 2013",] which recognizes the
continuing commitment by business to conduct itself ethically and contribute to economic development, while
improving the quality of life of the workforce.
Philanthropy All of the philanthropic activities of Muthoot Finance are conducted through the Muthoot M
George Foundation, which also conducts tree plantation drives and offers scholarships to the needy on a
regular basis. The company is also involved in various philanthropic initiatives, which focus on education
through M George Foundation, environment, health, financial assistance and eco-friendliness. With the
assistance of the Credai Clean City Movement, the company is associated with the concept of an E-toilet,
which was a public sanitation initiative. Additionally, the company holds regular agricultural seminars by the
name of "Ente Adukkalathottum" ("My Kitchen Garden") which educates farmers on the effects of pesticide
residues in food and how to counter that for healthier living. It has also been actively involved in helping
cancer patients, as well as individuals diagnosed with from kidney diseases, by financially covering medical
expenses.
The company runs the Kochi Chapter of the "Horn Not Ok Please" initiative, which raises awareness on the
harmful effects of vehicular noise pollution. The company has also launched a Centre for Promoting/Creating
Road Traffic Awareness at the office of the Asst. Commissioner of Police in Kochi to help raise awareness
about road safety and the prevention of traffic accidents.In 2012, the Muthoot Group launched the first Paul
George Memorial Tournament, which was aimed at Government School Children in the Delhi NCR region.
The winners of the tournament were given scholarships
Mar-
19 Mar20 Mar-21 Mar-22 Mar-23 Dec-23
73.49 73.43
Promoters + % % 73.40% 73.37% 73.35% 73.35%
FIIs + 12.35 14.37 15.99% 12.13% 9.37% 8.34%
% %
DIIs + 9.83% 7.09% 6.60% 9.67% 12.66% 14.61%
Government + 0.00% 0.00% 0.00% 0.00% 0.00% 0.00%
Public + 4.33% 5.12% 4.02% 4.83% 4.61% 3.72%
No. of 67,53 1,60,78 2,42,21 2,72,14 2,03,28
Shareholders 46,455 9 9 6 8 4
3.72
14.61
8.34
73.35
PROMOTER FLLs DIIs PUBLIC
INTERPETATION
PROFIT & LOSS OF MUTHOOT FINANCE

19 20 21 22 23
10,55 11,08 10,51
Revenue 6,878 8,715 7 2 5
Interest 2,243 2,796 3,699 3,845 3,709
Expenses + 1,518 1,827 1,818 1,891 2,110
Financing Profit 3,117 4,092 5,040 5,347 4,696
Financing Margin
% 45% 47% 48% 48% 45%
Other Income + 2 8 17 16 29
Depreciation 42 43 51 54 58
Tax % 36% 26% 26% 26% 26%
Net Profit + 1,972 3,018 3,722 3,954 3,474
EPS in Rs 49.22 75.26 92.78 98.53 86.52
Dividend Payout
% 24% 20% 22% 20% 25%
GRAPH OF PBT
Chart Title
2023
4,666
2022
5,309
2021
5,007
2020
4,057
2019
3,077
0 1,000 2,000 3,000 4,000 5,000 6,000
BALANCE SHEET OF MUTHOOT FINANCE
Mar-
Mar-19 Mar-20 Mar-21 Mar-22 23
Equity Capital 401 401 401 401 401
20,66
Reserves 9,392 11,171 14,838 17,943 0
49,73
Borrowings + 26,833 37,130 45,946 49,811 4
Other Liabilities
+ 1,443 1,758 2,280 2,399 1,824
72,62
Total Liabilities 38,069 50,460 63,465 70,555 0
Fixed Assets + 193 228 247 267 272
CWIP 23 29 38 46 67
Investments 983 1,438 1,590 1,320 1,317
70,96
Other Assets + 36,871 48,765 61,589 68,921 4
72,62
Total Assets 38,069 50,460 63,465 70,555 0
INTERPRETATION
The profit before tax of MUTHOOT FINANCE has been Decrease rapidly in 2023 to 4,666cr from 2022 i.e
5,309cr
4.5 COMPANY OVERVIEW - L&T Finance Holdings Ltd
Larsen & Toubro Limited, abbreviated as L&T, is an Indian multinational conglomerate, with interests in
engineering, construction, manufacturing, technology, information technology, military and financial services.
It is headquartered in Mumbai, Maharashtra. L&T was founded in 1938 in Bombay by Danish engineers
Henning Holck-Larsen and Søren Kristian Toubro.As of March 31, 2022, the L&T Group comprises 93
subsidiaries, 5 associate companies, 27 joint ventures and 35 jointly held operations, operating across basic and
heavy engineering, construction, realty, manufacturing of capital goods, information technology, and financial
services.On October 1, 2023, Shri. S N Subrahmanyan took charge as Chairman and Managing Director of
L&T.HistoryLarsen and Toubro were in India to represent the interests of the Danish dairy equipment
manufacturer FLSmidth when they founded L&T through an oral agreement in 1938. The company was
legally incorporated in 1946.
The start of the World War II in 1939 and the resulting blockade of trade, led Larsen and Toubro to undertake
jobs and provide service facilities. The German invasion of Denmark in April 1940 stopped supplies of Danish
products. The war-time need to repair, refit, and degauss ships offered L&T an opportunity, and led to the
formation of a new company, Hilda Ltd, to handle these operations. L&T also started to repair and fabricate
ships. The internment of German engineers in India who were to construct a soda ash plant for the Tata Group
gave L&T a chance to enter the field of installation.
In 1946, they incorporated Engineering Construction & Contracts Ltd. (ECC) to focus on construction projects.
ECC now exists as the construction division of L&T.By 1947, the company represented the manufacturers of
equipment used to manufacture products such as hydrogenated oils, biscuits, soaps and glass. In 1947, the
company signed an agreement with Caterpillar Tractor Company to market earth moving equipment. At the
end of the war, large numbers of war-surplus Caterpillar equipment were available at attractive prices, but the
finances required were beyond the capacity of the partners. This prompted them to raise additional equity
capital, and on 7 February 1946, Larsen & Toubro Private Limited was incorporated.
In 1947, the firm set up offices in Calcutta and Madras and New Delhi. In 1948, 55 acres of undeveloped
marsh and jungle was acquired in Powai, Mumbai. In December 1950, L&T became a public company with a
paid-up capital of ₹20 lakh (equivalent to ₹22 crore or US$2.8 million in 2023). The sales turnover in that year
was ₹1.09 crore (equivalent to ₹120 crore or US$15 million in 2023). In 1956, a major part of the company's
Bombay office moved to ICI House in Ballard Estate, which would later be purchased by the company and
renamed as L&T House, its present headquarters.
During the 1960s, ventures included the Utkal Machinery Limited (UTMAL) (set up in 1960), Audco India
Limited (1961), Eutectic Welding Alloys (1962) and Tractor Engineers Limited (TENGL) (1963).In 1965, the
firm had been chosen as a partner for building nuclear reactors. Dr. Homi Bhabha, chairman of the Atomic
Energy Commission had approached L&T in the 1950s to fabricate critical components for nuclear reactors.
L&T has since been a significant contributor to the Indian nuclear programme.During the 1970s, L&T was
contracted to work with Indian Space Research Organisation (ISRO). Chairman Vikram Sarabhai chose L&T
as manufacturing partner.In 1976, ECC bid for a large airport project in Abu Dhabi. ECC's balance sheet,
however, did not meet the bid's financial qualification requirement. So it was merged into L&T. ECC was
eventually rechristened L&T Construction and now accounts for the largest slice of the group's annual
revenue.In 1985, L&T entered into a partnership with Defence Research and Development Organisation
(DRDO). L&T was not yet allowed by the government to manufacture defence equipment but was permitted to
participate in design and development programmes with DRDO. After the design and development was done,
the firm had to hand over all the drawings to DRDO. The government would then assign the production work
to a public sector defence unit or ordnance factory for manufacture. The firm currently makes a range of
weapon and missile systems, command and control systems, engineering systems, and submarines through
DRDO.
L&T – Construction Equipment Limited: having its registered office at Mumbai, India and focusing on
construction equipment and mining equipment, L&T-Komatsu Limited[17] was a joint-venture of Larsen and
Toubro, and Komatsu Asia Pacific Pte Limited, Singapore, a wholly owned subsidiary of Komatsu Limited,
Japan. Komatsu is the world's second largest manufacturer of hydraulic excavators and has manufacturing and
marketing facilities.[18] The plant was started in 1975 by L&T to manufacture hydraulic excavators for the
first time in India. In 1998, it became a joint-venture. The Bengaluru works comprise machinery and
hydraulics works, with a manufacturing facility for design, manufacture, and servicing of earth moving
equipment. In April 2013, L&T bought the 50% stake held by Komatsu Asia & Pacific. The company's name
was changed to L&T Construction Equipment Limited.L&T has a joint venture with Qatari company Al
Balagh group as the main contractors for the Al Rayyan stadium, the 2022 FIFA World Cup stadium which
will host matches up to the quarter-final.L&T Finance: Larsen & Toubro financial services is a subsidiary
which was incorporated as a non-banking financial company in November 1994. The subsidiary has financial
products and services for corporate, construction equipments. This became a division in 2011 after the
company declared its restructuring.A partnership between L&T Finance and Sonalika Group farm equipment
maker International Tractors Ltd in April 2014 provided credit and financing to customers of Sonalika Group
in India.
L&T Special Steels and Heavy Forgings Pvt Ltd. is a joint venture between L&T and NPCIL, headquartered at
Hazira. It is the largest integrated steel plant and heavy forging unit in India, capable of producing forgings
weighing 120 MT each. LTSSHF currently is engaged in projects from the nuclear, hydrocarbon, power and
oil and gas sectors.L&T-Sargent & Lundy Limited (L&T-S&L), established in 1995, is an engineering and
consultancy firm in the power sector, formed by L&T and Sargent & Lundy L.L.C. - USA, a global consulting
firm in the power industry since 1891In 2015, the company began developing commercial, retail and office
space around the Hyderabad Metro Rail project.In June 2019, the company acquired a controlling stake in IT
services company Mindtree Ltd
Mar-19 Mar-20 Mar-21 Mar-22 Mar-23 Dec-23

Promoters + 63.91% 63.72% 63.62% 66.26% 66.11% 65.90%
FIIs + 11.39% 10.60% 10.60% 6.91% 11.35% 10.67%
DIIs + 2.96% 5.22% 5.88% 4.57% 6.58% 9.07%
Public + 21.73% 20.46% 19.91% 22.26% 15.96% 14.36%
No. of 4,82,11 5,39,17 6,34,61 7,86,11 7,08,23 6,87,72
Shareholders 9 6 4 3 7 1
14.36
9.07
10.67
65.9
PROMOTER FLLs DLLs PUBLIC
INTERPETATION
PROFIT & LOSS OF L&T HOLDING LTD

Sales + 13,365 14,104 13,353 11,930 12,775
Expenses + 3,377 4,160 5,401 5,233 5,248
Operating Profit 9,988 9,944 7,952 6,697 7,527
OPM % 75% 70% 60% 56% 59%
Other Income + -4 370 836 594 105
Interest 6,882 7,552 7,230 5,765 5,812
Depreciation 50 82 86 103 111
Tax % 27% 37% 36% 26% 10%
Net Profit + 2,232 1,700 949 1,049 1,536
EPS in Rs 9.06 6.9 3.93 4.33 6.55
Dividend Payout
% 9% 11% 0% 12% 31%
GRAPH OF PBT
Chart Title
2023
2022
2021
2020
2019
0 500 1,000 1,500 2,000 2,500 3,000 3,500
Series 3 Column1 Series 1
BALANCE SHEET OF L&T HOLDING LTD

Equity Capital 1,999 2,005 2,469 2,474 2,480
Reserves 11,450 12,688 16,304 17,474 19,049
Preference
Capital 0 0 0 0 0
Borrowings + 91,507 93,934 88,592 85,237 83,105
Other
Liabilities + 1,094 902 1,582 1,696 1,706
1,06,05 1,09,52 1,08,94 1,06,88 1,06,33
Total Liabilities 0 9 7 0 9
Fixed Assets + 1,127 1,100 1,138 509 553
CWIP 39 62 24 22 5
Investments 8,641 5,979 8,872 11,917 14,366
1,02,38
Other Assets + 96,243 7 98,912 94,433 91,415
1,06,05 1,09,52 1,08,94 1,06,88 1,06,33
Total Assets 0 9 7 0 9
INTERPRETATION
CHAPTER 5
CONCLUSION
The study of Non-Banking Financial Companies (NBFCs) reveals a dynamic sector that has become an
integral part of the financial landscape. NBFCs have filled crucial gaps left by traditional banks, offering
tailored financial solutions to underserved segments of the population, such as small businesses, rural
communities, and individuals with limited credit histories. Their flexibility, innovation, and customer-centric
approach have spurred financial inclusion and fueled economic growth. The continued growth of NBFCs
depends on factors such as a supportive regulatory environment, technological advancements, and their
ability to manage risks effectively. With the right conditions, NBFCs have the potential to further expand
their reach, offer new and innovative products, and play an even more significant role in fostering a robust
and inclusive financial system.
Essential to Financial Landscape: NBFCs are no longer niche players but important components of a healthy
financial system.
Financial Inclusion: Their focus on underserved populations is a major driver of increased access to financial
services.
Economic Growth Drivers: By supporting businesses and individuals, NBFCs contribute to overall economic
progress.
Innovation: NBFCs often bring technological innovation into the financial sector through digital lending and
streamlined processes.
Regulatory Balance: Supportive but careful regulation will be crucial for continued stable growth of the
sector.

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“STUDY AND GROWTH OF NON BANKING FINANCIAL COMPANY”

UNIVERSITY OF MUMBAI FOR PARTIAL COMPLETION OF THE DEGREE OF

BACHELOR IN COMMERCE (FINANCIAL MARKETS)

UNDER THE FACULTY OF COMMERCE

MR. ARJUN DEEPAK SINGH

UNDER THE GUIDANCE OF

MS. HARSHA HARDASANI

SMT. M.M.K COLLEGE OF COMMERCE & ECONOMICS

UNIVERSITY OF MUMBAI FOR PARTIAL COMPLETION OF THE DEGREE OF

BACHELOR IN COMMERCE (FINANCIAL MARKETS)

UNDER THE FACULTY OF COMMERCE

MR. ARJUN DEEPAK SINGH

UNDER THE GUIDANCE OF

MS. HARSHA HARDASANI

SMT. M.M.K COLLEGE OF COMMERCE & ECONOMICS

SMT. M.M.K COLLEGE OF COMMERCE & ECONOMICS

Seal of the college

Name and Signature of Guiding Teacher

Name and Signature of the learner

Name and signature of the Guiding Teacher

Chapter No. Topics Page No.

4 Data Analysis, Interpretation and

5 Conclusion and Suggestions

1.1DEFINATION OF NBFC ACCORDING TO RESERVE BACK

1. A financial Institution which is a company;

1. The financing, whether by way of making loans or advances or otherwise, of any

1.2 CHARACTERISTICS OF NBFC’S

1.2 DIFFERENCE BETWEEN BANKS AND NBFC’S

BASIC BANK NBFC’S

MEANING Banks are government NBFC is a company which

customers. bank license.

REGESTERED UNDER Banks are registered under NBFC is registered under

deposits. accept deposits.

INVESTMENT In banks a foreign In NBFC, Foreign

PAYMENT SYSTEM Payment and settlement is In NBFC, the payment

demand draft on itself. demand draft their own.

cheque by their own. cheque their own.

CREDIT CREDITORS Banks can create credit NBFC cannot do it.

TRANSACTION Bank provides a range of NBFC does not provide

SERVICE transaction services. transaction services.

1.4 THE DIFFERENT TYPES OF NBFC ARE AS FOLLOW:

1.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

total assets and total income respectively.

as its principal business the acquisition of securities,

4.Infrastructure Finance Company (IFC): IFC is a non-banking finance company a) which

5.Core Investment Company (CIC-ND-SI): CIC-ND-SI is an NBFC carrying on the business of

acquisition of shares and securities.

6.Infrastructure Debt Fund: Non- Banking Financial Company (IDF-NBFC): IDF-NBFC is a

Non-Banking Financial Company - Micro Finance Institution (NBFC-MFI): NBFC-MFI is

assets which satisfy the following criteria:

Total indebtedness of the borrower does not exceed Rs 1, 00,000;

prepayment without penalty;

Loan to be extended without collateral;

loans given by the MFIs;

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

9.NBFC- Non-Operative Financial Holding Company (NOFHC) - is financial institution throughwhich

extent permissible under the applicable regulatory prescription

1.5 Problems Plaguing in NBFCs

a) Overview and Operating environment

e) Compliance with statutory requirements

g) Size and Market Presence