llnanclal Servlces

JaL are flnanclal servlces?

W A flnanclal servlce means any servlce or producL of a flnanclal naLure LaL ls sub[ecL Lo
or governed by a measure adopLed or malnLalned by a parLy or by a publlc body LaL
exerclses regulaLory or supervlsory auLorlLy delegaLed by law and lncludes buL ls noL
llmlLed Lo deposlLLaklng loan and lnvesLmenL servlces lnsurance esLaLe LrusL and
agency servlces securlLles and all forms of flnanclal or markeL lnLermedlaLlon
lncludlng buL noL llmlLed Lo Le dlsLrlbuLlon of flnanclal producLs
W llnanclal servlces can Lerefore be classlfled lnLo
nsurance and lnsurance relaLed servlces
8anklng servlces
MarkeL lnLermedlary servlces
nonbanklng flnanclal servlces

@ypes of llnanclal Servlces

W Iund 8ased I|nanc|a|
Serv|ces
LqulpmenL leaslng
Plre urcase
8lll ulscounLlng
4 Loans/nvesLmenLs
3 venLure CaplLal
6 Pouslng llnance
7 lacLorlng
W Iee 8ased I|nanc|a|
Serv|ces
ssue ManagemenL
Servlces
orLfollo ManagemenL
CorporaLe Counsellng
4 Loan SyndlcaLlon
3 Arranglng lorelgn
CollaboraLlon
6 Merger AcqulslLlon
7 CaplLal 8esLrucLurlng
4
JaL are n8lCs?
W A non8anklng llnanclal Company (n8lC) ls a company reglsLered under Le
Companles AcL 36
W engaged ln Le buslness of loans and advances acqulslLlon of sares /sLock /bonds
/debenLures /securlLles lssued by CovernmenL or local auLorlLy or oLer
securlLles of llke markeLable naLure leaslng lrepurcase lnsurance buslness
clL buslness
W buL does noL lnclude any lnsLlLuLlon wose prlnclpal buslness ls LaL of agrlculLure
acLlvlLy lndusLrlal acLlvlLy sale/purcase/consLrucLlon of lmmovable properLy
W A nonbanklng lnsLlLuLlon wlc ls a company and wlc as lLs prlnclpal buslness
of recelvlng deposlLs under any sceme or arrangemenL or any oLer manner or
lendlng ln any manner ls also a nonbanklng flnanclal company (8eslduary non
banklng company)
AdvanLages of n8lCs
W lower LransacLlons cosLs of Lelr operaLlons
W qulck declslonmaklng ablllLy
W cusLomer orlenLaLlon and
W prompL provlslon of servlces
8eglsLraLlon wlL 88
W n Lerms of SecLlon 43A of Le 88 AcL 4 lL ls mandaLory LaL every
n8lC sould be reglsLered wlL 88 Lo commence or carry on any buslness
of nonbanklng flnanclal lnsLlLuLlon as deflned ln clause (a) of SecLlon 43
of Le 88 AcL 4
W Powever Lo obvlaLe dual regulaLlon cerLaln caLegorles of n8lCs wlc are
regulaLed by oLer regulaLors are exempLed from Le requlremenL of
reglsLraLlon wlL 88 vlz
venLure CaplLal lund/MercanL 8anklng companles/SLock broklng companles
reglsLered wlL SL8
nsurance Company oldlng a valld CerLlflcaLe of 8eglsLraLlon lssued by 8uA
nldl companles as noLlfled under SecLlon 6A of Le Companles AcL 36
ClL companles as deflned ln clause (b) of SecLlon of Le ClL lunds AcL
or
Pouslng llnance Companles regulaLed by naLlonal Pouslng 8ank
9rocedure for keg|strat|on w|th k8I
W Mlnlmum neL owned fund of 8s 3 lak (ralsed Lo 8s lak wef Aprll )
W SubmlL an appllcaLlon onllne by accesslng 88#s secured webslLe LLps//secwebrblorgln
W @e company as Lo cllck on CLCk" for Company 8eglsLraLlon on Le logln page
W A wlndow sowlng Le Lxcel appllcaLlon forms avallable for download would be dlsplayed
W uownload sulLable appllcaLlon form (le n8lC or SC/8C) from Le above webslLe key ln Le
daLa and upload Le appllcaLlon form
W 8emember Lo lndlcaLe Le name of Le correcL 8eglonal Cfflce ln Le fleld C" of Le Annx
denLlflcaLlon arLlculars" workseeL of Le Lxcel appllcaLlon form
W @e company would Len geL a Company AppllcaLlon 8eference number for Le Co8
appllcaLlon flled onllne
W SubmlL Le ard copy of Le appllcaLlon form (lndlcaLlng Le Company AppllcaLlon 8eference
number of lLs onllne appllcaLlon) along wlL Le supporLlng documenLs Lo Le concerned
8eglonal Cfflce
W @e company can Len ceck Le sLaLus of Le appllcaLlon based on Le acknowledgemenL
number
W @e 8ank would lssue CerLlflcaLe of 8eglsLraLlon afLer saLlsfylng lLself LaL Le condlLlons as
enumeraLed ln SecLlon 43A of Le 88 AcL 4 are saLlsfled

ulfference beLween banks n8lCs

W n8lCs are dolng funcLlons akln Lo LaL of banks owever
Lere are a few dlfferences
l a n8lC cannoL accepL demand deposlLs
ll lL ls noL a parL of Le paymenL and seLLlemenL sysLem and as
suc cannoL lssue ceques Lo lLs cusLomers and
lll deposlL lnsurance faclllLy of uCCC ls noL avallable for n8lC
deposlLors unllke ln case of banks

lund 8ased llnanclal Servlces

u|pment |eas|ng CbLalnlng Le use of maclnery velcles or oLer equlpmenL on a renLal
basls Cwnerslp resLs ln Le ands of Le flnanclal lnsLlLuLlon or leaslng company wlle Le
buslness as Le acLual use of lL
2 |re 9urchase Plrlng of goods by paylng regular lnsLallmenLs of lnLeresL and prlnclpal Lo Le
lrepurcase company over a perlod of monLs lull ownerslp passes Lo Le lree aL Le end
of Le perlod (Le lree ls able Lo use Le goods from Le ouLseL)
3 8||| D|scount|ng @e acL of andlng over an endorsed 8/L for ready money ls called blll
dlscounLlng @e margln beLween ready money pald and Le face value of Le blll ls called Le
dlscounL and ls calculaLed aL a raLe percenLage per annumon Le maLurlLy value
4 Ienture Cap|ta| CfLen referred Lo as rlsk caplLal lL ls a Lype of equlLy lnvesLmenL usually besL
sulLed for rapldly growlng companles LaL requlre a loL of caplLal or sLarLup companles wlL a
sLrong buslness plan
S Iactor|ng lacLorlng conLracL means a conLracL concluded beLween Le suppller and Le lacLor
pursuanL Lo wlc Le suppller may or wlll asslgn Lo Le lacLor recelvables arlslng from sale of
goods made beLween Le suppller and ls cusLomers

lee 8ased llnanclal Servlces

Issue Management Serv|ces lncludes advlslng abouL Le Lype of securlLles Lo be
lssued drafL of prospecLus and appllcaLlon forms compllance wlL procedural
formallLles appolnLmenL of reglsLrars Lo deal wlL sare appllcaLlons and Lransfers
llsLlng of securlLles arrangemenL of underwrlLlng placlng of lssues selecLlon of
brokers and bankers Lo Le lssue publlclLy and adverLlslng agenLs prlnLers and so
on
2 9ortfo||o Management Serv|ces advlslng /dlrecLlng /underLaklng Le managemenL/
admlnlsLraLlon of porLfollo of securlLles/funds of cllenLs on bealf of Le laLLer
3 oan Synd|cat|on f a flnanclal requlremenL of a company exceeds Le capablllLy of
one slngle bank syndlcaLed loans are granLed SyndlcaLed loans lnvolve Lwo or more
banks formlng a syndlcaLe and underLaklng Lo granL Lo Le borrower a medlum or
longLerm loan based on a sLandard conLracL under equlvalenL condlLlons

ulfference beLween lacLorlng and 8lll

ulscounLlng
8ecourse
MaLurlLy erlod
CosL
4 nsLrumenLs

ulfference beLween MercanL 8anklng and

nvesLmenL 8anklng
W nvesLmenL banks asslsL publlc and prlvaLe corporaLlons ln ralslng funds ln Le
CaplLal MarkeLs (boL equlLy and debL) as well as ln provldlng sLraLeglc advlsory
servlces for mergers acqulslLlons and oLer Lypes of flnanclal LransacLlons
W MercanL banks deLermlne Le caplLal sLrucLure drafL of prospecLus and
appllcaLlon forms compllance wlL procedural formallLles appolnLmenL of
reglsLrars Lo deal sare appllcaLlon and Lransfers llsLlng of securlLles arrangemenL
of underwrlLlng/subunderwrlLlng placlng of lssues selecLlon of brokers and
bankers Lo Le lssue publlclLy and adverLlslng agenLs prlnLers and so on
W MercanL banklng ls lnfacL a LradlLlonal Lerm for nvesLmenL 8anklng @aL ls Le
reason we do noL ave any separaLe regulaLlons governlng lnvesLmenL banks ln
ndla

8rlef PlsLory of llnanclal Servlces ndusLry ln

ndla
W @e SLaLe of nfancy
(8eLween 3 )
W Second SLage ()
W @lrd SLage (osL #s)
ubllc/CovernmenL Cwnerslp of
llnanclal nsLlLuLlons
lorLlflcaLlon of lnsLlLuLlonal sLrucLure
roLecLlon Lo lnvesLors
4 arLlclpaLlon of flnanclal lnsLlLuLlons ln
corporaLe managemenL
- rlvaLlzaLlon of flnanclal lnsLlLuLlons
- 8eorganlzaLlon of lnsLlLuLlonal sLrucLure
- n8lC
- roLecLlon Lo lnvesLorsCreaLlon of SL8
SeLLlng up of deposlLorles
CllLs @radlng
8ook 8ulldlng
4
8eforms ln llnanclal Servlces SecLor
W Compet|t|on nhanc|ng Measures
W Measures nhanc|ng ko|e of Market Iorces
W 9rudent|a| Measures
W Inst|tut|ona| and ega| Measures
W Superv|sory Measures
W 1echno|ogy ke|ated Measures
3
LlemenLs ln flnanclal servlces value caln
W nsLrumenLs
W MarkeL players
W 8egulaLory 8odles and Speclallzed nsLlLuLlons
8eserve 8ank of ndla
SecurlLles Lxcange 8oard of ndla
SLock excanges
CredlL 8aLlng Servlces
8egulaLory lramework
W 8anks are sub[ecL Lo lncome recognlLlon asseL classlflcaLlon and provlslonlng
norms caplLal adequacy norms slngle and group borrower llmlLs prudenLlal llmlLs
on caplLal markeL exposures classlflcaLlon and valuaLlon norms for Le lnvesLmenL
porLfollo C88 / SL8 requlremenLs accounLlng and dlsclosure norms and
supervlsory reporLlng requlremenLs
W n8lCs u are sub[ecL Lo slmllar norms as banks excepL C88 requlremenLs and
prudenLlal llmlLs on caplLal markeL exposures Powever even were appllcable
Le norms apply aL a rlgour lesser Lan Lose appllcable Lo banks
W n8lCs can underLake acLlvlLles LaL are noL permlLLed Lo be underLaken by banks
or wlc Le banks are permlLLed Lo underLake ln a resLrlcLed manner for
example flnanclng of acqulslLlons and mergers caplLal markeL acLlvlLles eLc
W @e dlfferences ln Le level of regulaLlon of Le banks and n8lCs wlc are
underLaklng some slmllar acLlvlLles glves rlse Lo conslderable scope for regulaLory
arblLrage
W Pence rouLlng of LransacLlons Lroug n8lCs would LanLamounL Lo undermlnlng
banklng regulaLlon @ls ls parLlally addressed ln Le case of n8lCs LaL are a parL
of banklng group on accounL of prudenLlal norms appllcable for banklng groups
-8ICs -D (-8IC -D SI)
W All n8lCs nu wlL an asseL slze of 8s crore and
more as per Le lasL audlLed balance seeL wlll be
consldered as a sysLemlcally lmporLanL n8lC nu
W Cap|ta| Adeuacy kat|o for -8ICs -D SI
n8lCs nu S sall malnLaln a mlnlmum CaplLal Lo
8lskwelgLed AsseLs 8aLlo (C8A8) of @e presenL
mlnlmum C8A8 sLlpulaLlon aL or 3 as Le case
may be for n8lCs u sall conLlnue Lo be appllcable
W S|ng|e ] Group posure norms for -8ICs -D SI to
be met