NON – BANKING FINANCIAL

COMPANY

Group no
 What is NBFC?

• Financial Institutions Which Are

Different In Nature From Banks.
• NBFC’s Provides All Type Of Activities
Which RBI Prohibits In Case Of
Banks.
• RBI regulates the working of NBFC’s
in India.
• The RBI act amended in 1997
delegates powers to RBI for
supervision of these NBFC’s
Classification Of Nbfc’s

 HIRE-PURCHASE FINANCE COMPANIES

 INVESTMENT COMPANIES
 CHIT FUND COMPANIES
 MUTUAL BENEFIT FINANCIAL COMPANIES
Hire-purchase finance companies

In hire purchase transaction, the goods are

delivered by the owner to another person on the
agreement that such person pays the agreed
amount in periodical installments.
Investment Companies
Investment companies are the
institutions, who pool savings of the
people by the issue of shares &
debentures & resort to other forms of
borrowings in order to make
investments of these resources in the
wide range of industrial securities.

Two type of investment companies:

• Management investment
company.
• Unit trust
Chit Fund Companies

Chit funds are oldest form of non banking finance

companies having origin in south India .
Three categories:
Simple chit
Prize chit
Business chit
Mutual Benefit Finance Companies

Oldest For Of NBFC In

India.
Popular Amongst Middle &
Lower Class People.
Non – Banking Statutory Financial Organization

These firms are similar to banks but are not

banks and treated by RBI as nbsfc’s. ex. Industrial
development bank of india.
Registration Of NBFC

The Working And Operations Of Nbfcs

Are Regulated By The Reserve Bank
Of India (RBI) Within The Framework
Of The Reserve Bank Of India Act,
1934 (Chapter III B) And The
Directions Issued By It Under The Act.
A Minimum Net Owned Fund (NOF)
Of Rs 25 Lakh (Raised To Rs 200 Lakh
W.E.F April 21, 1999).
Public Deposit Requirement

 Ceiling on quantum of public deposits

 Investment in liquid assets
 Period of Deposits
 Ceiling of deposit rate
 Advertisement methodology
 Submission of returns
MAJOR RECOMMENDATION BY TASK FORCE ON
NBFC

• Requires Quick Redressal System

• Net Owned Fund Requirement
• Time Bound Registration Requirement
• Credit Rating Requirement
• Option For SLR
• Ceiling For Public Deposit
• Liquid Asset Ratio
• Requirement Of Suitable Ratio
• Cognisable offence
Prudential Norm
Applicable To All Nbfcs

Income Recognition Norms

NPA norms
Restrictive Norms
Policy on demand/call loans
Accounting Standards
Accounting for investments
Provisioning for Non-Performing asset
Disclosure requirements
Prudential Norms Applicable

Only Those Nbfc's Which Are Accepting/Holding Public Deposits:

 Capital to Risk Assets Ratio

 Credit/investment concentration norms
 Restrictive norms
 Reporting System: Half yearly return
Bank Lending To Nbfc’s

• Withdrawn Ceiling On Bank Credit.

• Should Take Borrowing Decision On Their Own.
• Need Based Finance To Nbfc’s
• Not To Grant Bridge Of The Loan
• Should Follow Rbi’s Instruction.
FINANCE
About L & T Finance:
L&T Finance Limited (LTF) is
one of the wholly owned
subsidiaries of Larsen and
Toubro.
Like the rest of the companies in
L&T group, LTF is also
professionally managed.
A steady growth rate validates
the trust that industry has
reposed in the company.
Products Offered By L & T
Corporate Finance

 Supply Chain Finance

 Operating / Finance Lease
 Working Capital / Term Loans
 Capital Markets Finance
Retail Finance

 Construction Equipment Finance

 Transportation Equipment Finance
 Rural Finance
 Micro-finance
CONCLUSION

Nbfc’s Are Playing Unique Role In Mobilizing

Funds & Directing Investments, Providing A Push To
Development, Especially In Industrial Sector,
Catering To The Varied Financial Needs Of The
Country.
SOURCES

VIPUL PRAKASHAN TEXT BOOK

L & T WEBSITE