Non-banking financial companies (NBFCs) provide banking services without a banking license and cannot accept deposits. They are regulated and registered with the Reserve Bank of India. Common NBFCs include asset finance companies, investment companies, and loan companies. Cooperative banks are owned by their members and provide banking and financial services to members. They operate on principles of cooperation and mutual assistance rather than profit. Common cooperative banks include primary credit societies, central cooperative banks, state cooperative banks, and urban cooperative banks.

1. COOPERATIVE BANK &
NON-BANKING FINANCIAL COMPANY
(NBFCs)

2. NON-BANKING FINANCIAL COMPANY
(NBFCs)
 A 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 like marketable nature, leasing, hire-
purchase, insurance business, chit business.
 NBFCs, are financial institutions that provide banking services, but do not
hold a banking license.
 These institutions are not allowed to take deposits from the public.
 All operations of these institutions are still covered under banking
regulations.

3. Registration of NBFCs
In terms of Section 45-IA of the RBI Act, 1934, it
is mandatory that every NBFC should be
registered with RBI to commence or carry on
any business of non-banking financial
institution as defined in clause (a) of Section 45
I of the RBI Act, 1934.

4. The NBFCs that are registered with RBI are
(I) Equipment leasing company
(II) Hire-purchase company
(III)Loan company
(IV)Investment company.
With effect from December 6, 2006
(I) Asset Finance Company (AFC)
(II) Investment Company (IC)
(III) Loan Company (LC)

5. Asset Finance Company (AFC)
AFCs are financial institutions
whose principal business is of
financing physical assets
such as automobiles
,tractors, construction
equipment material handling
equipment and other
machines. Ex: Bajaj Auto
Finance corp.

6. Investment Company (IC)
ICs generally are involved in
the business of shares, stocks,
bonds, debentures issued by
government or local authority
that are marketable in nature.
As such they provide finance
mainly to companies
associated with these
business houses.

7. Loan Company
Loan Company is a
company which carries on
as its principle business, the
providing of finance whether
by making loans or
advances or otherwise for
any activity other than its
own. These can be housing
loans, gold loans etc.

8. Significance of NBFCs in India
 According to the Economic Survey 2010-
11, it has been reported that NBFCs as a
whole account for 11.2 per cent of assets
of the total financial system.
 NBFCs have turned out to be engines of
growth and are integral part of the Indian
financial system, enhancing competition
and diversification in the financial sector,
spreading risks specifically at times of
financial distress and have been
increasingly recognized as
complementary of banking system at
competitive prices.

9. COOPERATIVE BANK
 A co-operative bank is a financial entity which belongs to its
members, who are at the same time the owners and the
customers of their bank.
 They are often created by persons belonging to the same
local or professional community or sharing a common interest.
 Co-operative banks generally provide their members with a
wide range of banking and financial services (loans, deposits,
banking accounts)

10. Features of Co-operative Banks:
 These Banks are organized and managed on the principal of co-operation,
self-help, and mutual help. They function with the rule of one member, one
vote.
 Function on "no profit, no loss" basis. Co-operative banks, as a principle, do
not pursue the goal of profit maximization.
 Co-operative bank performs all the main banking functions of deposit
mobilization, supply of credit and provision of remittance facilities. Co-
operative Banks provide limited banking products and are functionally
specialists in agriculture related products. However, co-operative banks
now provide housing loans also.

11. FUNCTIONS OF CO-OPERATIVE BANK
Co-operative Banks are organised and managed on
the principal of co-operation, self-help, and mutual
help. They work on the basis of “no profit no loss”.
Profit maximization is not their goal.
Co-operative bank do banking business mainly in
the agriculture and rural sector. However, UCBs,
SCBs, and CCBs operate in semi urban, urban,
and metropolitan areas also.

12. Finance Function:
1. Cooperative banks in India finance rural areas under:
• Farming Cattle
• Milk
• Personal finance
2. Cooperative banks in India finance urban areas under:
• Self-employment
• Industries
• Small scale units
• Home finance
• Consumer finance
• Personal finance

13. Types of Cooperative Banks
1.Primary Co-operative Credit Society
The primary co-operative credit society is an
association of borrowers and non-borrowers residing in
a particular locality.
The funds of the society are derived from the share
capital and deposits of members and loans from
central co-operative banks.
The borrowing powers of the members as well as of the
society are fixed.
The loans are given to members for the purchase of
cattle, fodder, fertilizers, pesticides, etc.

14. 2.Central co-operative banks
 These are the federations of primary credit societies in a district
and are of two types- those having a membership of primary
societies only and those having a membership of societies as
well as individuals.
 The funds of the bank consist of share capital, deposits, loans
and overdrafts from state co-operative banks and joint stocks.
 These banks provide finance to member societies within the
limits of the borrowing capacity of societies.
 They also conduct all the business of a joint stock bank.

15. 3.State co-operative banks
The state co-operative bank is a federation of central
co-operative bank and acts as a watchdog of the
co-operative banking structure in the state.
Its funds are obtained from share capital, deposits,
loans and overdrafts from the Reserve Bank of India.
The state cooperative banks lend money to central
co-operative banks and primary societies and not
directly to the farmers.

16. 4.Urban Co-operative Banks
 The term Urban Co-operative Banks (UCBs), though not
formally defined, refers to primary co-operative banks
located in urban and semi-urban areas.
 These banks, till 1996, were allowed to lend money only for
non-agricultural purposes. This distinction does not hold today.
 These banks were traditionally centered on communities,
localities, work place groups.
 They essentially lend to small borrowers and businesses.
Today, their scope of operations has widened considerably.