DEPARTMENT OF TECHNICAL EDUCATION

ANDHRA PRADESH
Name : Smt M. L . Kameshwari
Designation : senior Lecturer in CCP
Institute : Govt. Poly. For women,
Bheempunipatnam
Semester : VI Semester
Subject : Banking—II
Sub-Code : CCP-604
Topic : Role of Non –Banking,
financial institution (9 to
10/18)
Duration : 50 minutes
Sub Topic : Regulatory frame work and
supervision of NBFC
Teaching Aids : PPT
CCP604(B). 63 to 64 1
Objectives

On completion of this period you

would be able to :

 Explain the supervisory and regulatory

framework of NBFC

CCP604(B). 63 to 64 2
Recap:

In the last class we have discussed

about the :
 The growth of NBFCs
 Reasons for rapid growth of NBFCs
 Reasons for the success of NBFCs

CCP604(B). 63 to 64 3
Supervision Of NBFCs

 The supervisory framework of NBFC

is based on three criteria
 Size of NBFC
 Type of activity performed
 Acceptance or otherwise of public
deposits

CCP604(B). 63 to 64 4
Regulation
 Salient features of RBI
Amendment Act 1997
 To protect the interest of the
depositors RBI Act 1934 was
amended in 1997
 Compulsory registration of all
NBFCs with RBI
 Minimum entry points

CCP604(B). 63 to 64 5
Regulation
 Maintenance of a portion of deposits
in liquid assets
 Creation of Reserve Fund
 Transfer of 20% of profit after tax to
Reserve Fund

CCP604(B). 63 to 64 6
Regulation…

 Empowerment of RBI to issue directions

 To prohibit deposit acceptance
 Alienation of assets by the company
 To initiate action of winding up of
companies

CCP604(B). 63 to 64 7
The RBI is empowered to undertake for
protecting of deposits

 On-site inspection based on CAMELS

(Capital Assets, Management, Earnings,
Liquidity, Systems And Procedures)
 Computerised off-site surveillance through
periodic control returns
 An effective market intelligence net-work
 System of submission of reports by auditors

CCP604(B). 63 to 64 8
Summary

 In this class we discussed about the

 Supervisory and regulatory framework of
NBFC

CCP604(B). 63 to 64 9
Quiz:

2. NBFC provide loans to customers

without security

d) True
e) False

CCP604(B). 63 to 64 10
Quiz
1. NBFCs charge lower rate of interest on
loans

c) True
d) False

CCP604(B). 63 to 64 11
Quiz
3. NBFCs mobilise deposits by offering
Attractive of higher
_________________rate of interest.

1. Every NBFC should compulsorily register

with the RBI

d) True
e) False

CCP604(B). 63 to 64 12
Quiz

5. NBFCs should create Reserve Fund as

per the regulation of RBI

a) True
b) False

CCP604(B). 63 to 64 13
Frequently Asked Questions

1. State the regulations of RBI on NBFCs

CCP604(B). 63 to 64 14