Non-banking financial companies (NBFCs) are non-banking institutions that provide banking services such as loans and advances. NBFCs are registered under the Companies Act and regulated by the Reserve Bank of India. Major NBFCs include HDFC and HUDCO. Unlike commercial banks, NBFCs cannot accept demand deposits or issue checks, and deposit insurance is not available for NBFC depositors. The RBI is considering providing banking licenses to select NBFCs and private sector companies if they meet eligibility criteria, which could strengthen competition in the banking sector and promote financial inclusion.

1. Presented by
Pawan Kumar Shrivas

2. 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.

3.  loans and advances
 Acquisition of shares
 Stock, bonds, debentures and securities
issued by government or local authority,
 leasing,
 hire-purchase,
 Insurance business.

4. NBFC
HDFC (Housing Development
Finance Corporation Limited)
Housing and Urban Development
Corporation Limited (HUDCO)

5. Commercial Banks
NBFC
• NBFC cannot accept demand • Commercial banks accept
deposits demand deposits
• NBFC cannot issue cheques • Commercial banks can issue
cheques
• Deposit Insurance and Credit • Deposit Insurance and Credit
Guarantee Corporation is not Guarantee Corporation is
available. available.

6.  TYPES OF NBFC’s :
 EQUIPMENT LEASING COMPANY
 HIRE-PURCHASE COMPANY
 LOAN COMPANY
 INVESTMENT COMPANY

7. “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 Lok
Sabha.

8. Recent Move
 India bulls
 Reliance Capital,
 Religare,
 IL&FS, IDFC
 Aditya Birla Financial Services
This is a significant step towards further strengthening and
broadening the banking sector and bringing it closer to the
AAM AADMI,”.

9.  “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.

10. 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.

11. • Strengthen Banking system
• Improvement in Quality of finance services
• Reach of Market
• Rural segment Focus through micro Finance

12. • Increase in Competition
• Difficult to implement Monetary Policy.
• Decrease in regulation power of RBI
• Excess credit formation

13. Thanks