29-01-2013, 09:12 AM
NBFC
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INTRODUCTION
NBFC is a Company registered under the Companies Act, 1956 and is engaged in the business of loans and advances, acquisition of shares / stock / bonds / debentures / securities issued by Government or local authority or other securities of marketable nature, leasing, hire-purchase, insurance business, chit business; but it does not include any institution whose principal business is that of agriculture activity, industrial activity, sale / purchase / construction of immovable property.
A non-banking institution which is a company and which has its principal business of receiving deposits under any scheme or arrangement or any other manner, or lending in any manner is also a NBFC (Residuary non-banking company).
Doing functions akin to that of banks; what is the difference then?
Role of the NBFCs.
NBFCs perform a very importanf financial intermediation role contributing to the economic development of the country. They supplement the role of banking sector.
RBI Act and Framework
The RBI regulates different types of NBFCs under the provisions of chapter III – B and Chapter III of the RBI Act, 1934. It was amended in 1997 incorporating
(i) amendment of the existing sections – 45I,45 MA & 58 B
(ii) insertion of new schemes – 45 A/B/C etc…
(iii) substitution by new section (45 S)