Non banking financial corporation

1. PRESENTED BY : DNYANESHWAR UGALMUGALE
NBFC’S

2. • Non-banking financial companies, or NBFCs, are financial
institutions that provide banking services, but do not hold a
banking license.
• A Non-Banking Financial Company (NBFC) is a company
registered under the Companies Act, 1956, engaged in the
business of loans and advances, acquisition of
shares/stocks/bonds/debentures/securities issued by
Government or local authority or other marketable
securities.

3. 1. Loans and credit facilities
2. Private education funding
3. Retirement planning
4. Trading in money market
5. Underwriting stocks and shares
6. Helps in managing portfolios of stocks and shares

4. 1. Development of sectors like transport
& infrastructure
2. Substantial employment generation
3. increase wealth creation
4. Broad base economic development
5. To finance economically weaker sections

5. Banks NBFCs
1. Definition Banking is acceptance of
deposits withdrawable by
cheque or on demand
NBFCs are companies
carrying financial business.
NBFCs cannot accept
demand deposits
2. Licensing
requirements
Licensing requirements are
quite stringent.
It is quite easy to form an
NBFC. Acquisition of
NBFCs is procedurally
regulated but not approval
required
3. Major limitations No non-banking activities
can be carried
Cannot provide checking
facilities
4. Foreign investment Upto 74% allowed to
private sector banks
Upto 100% allowed

6. 5. Regulations BR Act and RBI Act lay
down stringent controls
over banks
Controls over NBFCs are
relatively much lesser
6. SLR/CRR
requirements
Banks are covered by SLR/
CRR requirements
NBFCs have to maintain a
certain ratio of deposits in
specified securities; no
such requirement for
nondepository companies

7. Formation and Incorporation of Company
Minimum Net Owned Capital (200lakh)
Opening a Fresh Bank Account
Making application for NBFC registration
Granting of registration certificate

8. 1)Provide loans and credit facilities
2) trade in money market instruments
3)do wealth management such as managing portfolios of stocks and shares
4)underwrite stock and shares and other obligations
5) NBFCs are the largest propellants of ushering finance into the country
6)The loan processing facility of NBFC is faster than what most banks provide.
7)Banks look into the financial needs of large business, whereas NBFC are more
concentrated on small borrowers.

9. 1)An NBFC is not a part of the payment and settlement system and as such an
NBFC cannot issue cheques drawn on itself
2)Deposit insurance facility is not available for NBFC depositors unlike in case of
banks
3)All NBFCs cannot accept deposits; only some can. Only those NBFCs holding a
valid Certificate of Registration with authorization to accept Public Deposits can
accept/hold public deposits
4)The regulatory mechanism for NBFCs is stringent(strict).

10. • HDFC
• Power Finance Corporation
• Reliance Capital
• Infrastructure Development Finance Company
• Rural Electricity Corp.
• Shree Global
• Shriram Transport Finance
• Bajaj Holdings
• M & M Financials
• Muthoot Finance