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No. Housing Finance Companies, Merchant Banking Companies, Stock
Exchanges, Companies engaged in the business of
stock-broking/sub-broking, Venture Capital Fund Companies, Nidhi
Companies, Insurance companies and Chit Fund Companies are NBFCs but
they have been exempted from the requirement of registration under
Section 45-IA of the RBI Act, 1934 subject to certain conditions.
Housing Finance Companies are regulated by
National Housing Bank, Merchant Banker/Venture Capital Fund
Company/stock-exchanges/stock brokers/sub-brokers are regulated by
Securities and Exchange Board of India, and Insurance companies are
regulated by Insurance Regulatory and Development Authority. Similarly,
Chit Fund Companies are regulated by the respective State Governments
and Nidhi Companies are regulated by Ministry of Corporate Affairs,
Government of India. Companies that do financial business but are
regulated by other regulators are given specific exemption by the
Reserve Bank from its regulatory requirements for avoiding duality of
regulation.
It may also be mentioned that Mortgage Guarantee Companies have
been notified as Non-Banking Financial Companies under Section 45
I(f)(iii) of the RBI Act, 1934. Core Investment Companies with asset
size of less than ? 100 crore, and those with asset size of ? 100 crore
and above but not accessing public funds are exempted from
registration with the RBI.
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What are the different types/categories of NBFCs registered with RBI?
NBFCs are categorized a) in terms of the type of liabilities
into Deposit and Non-Deposit accepting NBFCs, b) non deposit taking
NBFCs by their size into systemically important and other non-deposit
holding companies (NBFC-NDSI and NBFC-ND) and c) by the kind of
activity they conduct. Within this broad categorization the different
types of NBFCs are as follows:
I. 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 therefrom is not less
than 60% of its total assets and total income respectively.
II. Investment Company (IC) : IC means any company which is a
financial institution carrying on as its principal business the
acquisition of securities,
III. 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.
IV. 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 Owned Funds of ?
300 crore, c) has a minimum credit rating of ‘A ‘or equivalent d) and a
CRAR of 15%.
V. Systemically Important Core Investment Company (CIC-ND-SI):
CIC-ND-SI is an NBFC carrying on the business of acquisition of shares
and securities which satisfies the following conditions:-
(a) it holds not less than 90% of its Total Assets in the form of investment in equity shares, preference shares, debt or loans in group companies;(b) its investments in the equity shares (including instruments compulsorily convertible into equity shares within a period not exceeding 10 years from the date of issue) in group companies constitutes not less than 60% of its Total Assets;(c) it does not trade in its investments in shares, debt or loans in group companies except through block sale for the purpose of dilution or disinvestment;(d) it does not carry on any other financial activity referred to in Section 45I(c) and 45I(f) of the RBI act, 1934 except investment in bank deposits, money market instruments, government securities, loans to and investments in debt issuances of group companies or guarantees issued on behalf of group companies.(e) Its asset size is ? 100 crore or above and(f) It accepts public funds
VI. 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. 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.
VII. 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 ? 1,00,000 or urban and semi-urban household income not exceeding ? 1,60,000;b. loan amount does not exceed ? 50,000 in the first cycle and ? 1,00,000 in subsequent cycles;c. total indebtedness of the borrower does not exceed ? 1,00,000;d. tenure of the loan not to be less than 24 months for loan amount in excess of ? 15,000 with prepayment without penalty;e. loan to be extended without collateral;f. aggregate amount of loans, given for income generation, is not less than 50 per cent of the total loans given by the MFIs;g. loan is repayable on weekly, fortnightly or monthly instalments at the choice of the borrower
VIII. 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.
IX. 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 ? 100 crore.
X. NBFC- Non-Operative Financial Holding Company (NOFHC) is
financial institution through which 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 prescriptions.
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