Banking Licenses for NBFC’s in banking and its impact on banking. Presented by: Gurmeet Singh Cheetan HarjeetKaur
. WHAT IS NBFC? NON-BANKING FINANCIAL COMPANY THE COMPANY REGISTERED UNDER COMPANIES ACT,1956 Register with RBI in terms of the Reserve Bank of India (Amendment) Act, 1997. All NBFCs together currently account for around nine percent of assets of the total financial system.
Services By NBFC loans and advances Acquisition of shares Stock, bonds, debentures and securities issued by government or local authority, leasing, hire-purchase, Insurance business.
Deposit Insurance and Credit Guarantee Corporation is not available.
Deposit Insurance and Credit Guarantee Corporation is available.
. TYPES OF NBFC’s : EQUIPMENT LEASING COMPANY HIRE-PURCHASE COMPANY LOAN COMPANY INVESTMENT COMPANY
NBFCs and the private sector can now enter the banking business if they meet RBI’s criteria. This is a major move for the financial sector “The RBI is considering new bank licenses to promoters in the private sector and also NBFCs, if they meet the eligibility criteria of the RBI,” Pranab Mukherjee said while presenting the annual Budget for 2010-11 in the LokSabha.
Recent Move India bulls Reliance Capital, Religare, IL&FS, IDFC AdityaBirla Financial Services This is a significant step towards further strengthening and broadening the banking sector and bringing it closer to the AAM AADMI,”. .
The entry of new banks will foster greater competition. “The Reserve Bank is considering providing licenses to a limited number of new banks. A larger number of banks would foster greater competition, and thereby reduce costs and improve the quality of service.” The greater competition would also promote financial inclusion.
. INDIAN SCENARIO Public sector banks = 27 New private sector banks=7 Old private sector banks=5, Foreign banks=31 Regional rural banks=86 Local area banks=4 Urban cooperative banks=1721 State cooperative banks=31 District central co-operative banks=371. Minimum capital requirements for new banks and promoters’ contribution, caps on promoter shareholding and other shareholders, foreign shareholding.