The document discusses the structure and regulations of non-banking financial companies (NBFCs) in India, detailing their services and types. It outlines the regulatory bodies overseeing NBFCs, the various categories of NBFCs as per the Reserve Bank of India, and the specific requirements for each category. Additionally, it addresses growth parameters, performance trends, and suggestions for improving the operational landscape for NBFCs, emphasizing the challenges they face in funding and regulation.

1. Project on
NBFC
Group Members:
Adil Garg
Ankur Agarwal
Anshul Gupta
Ayush Jain
Siddhant Kumar
Varsha Maheshwari

2.  A Non-Banking Financial
Company (NBFC) is a financial
institution registered under
company act 1956 that
provides banking services but
do not hold banking license.
 Restricted from taking
deposits from public.
 Generally NBFCs are engaged
in :
• Loans & Credit facilities.
• Private Education funding.
• Retirement Planning.
• Trading in Money Market.
• Wealth Management
What is NBFC?

3. Regulators of NBFC
NBFCs registered with RBI :
Regulation, supervision,
surveillance under RBI.
National Housing Bank :
Housing Finance Institutions
SEBI :
Merchant Banking Company
MCA:
Nidhi & Mutual Benefit Companies.
IRDA: Insurance Company

4. Categories of NBFC’S
Registered with RBI
1. Asset Finance Company(AFC)
2. Investment Company(IC)
3. Loan Company(LC)
4. Infrastructure Finance
Company(IFC)
• Net owned funds of at least Rs.
300 Crore.
• Deploy at least 75 % of its total
assets in infrastructure loans.
• Minimum credit rating of ‘A ‘or
equivalent.
• CRAR of 15%.

5. 5. Systematically Important Core
Investment Company(CIC-ND-SI)
• NBFC carrying on the business
of acquisition of shares and
securities
• Asset size >=Rs 100 crore
• holds not less than 90% of its
Assets in the form of
investment in equity shares,
preference shares, debt or
loans in group companies
• Out of the 90%, 60% should be
invested in equity shares or
those instruments which can
be compulsorily converted into
equity shares.

6. 6. Infrastructure Debt Fund: Non-
Banking Financial Company(IDF-
NBFC)
• facilitates the flow of long term
debt into infrastructure
projects
• raises resources through issue
of Rupee or Dollar
denominated bonds of
minimum 5 year maturity.

7. 7. Micro Finance
Institution(NBFC- MFI)
• non-deposit taking NBFC which has
at least 85% of its assets in the
form of microfinance
• loan amount does not exceed Rs.
50,000 in the first cycle and Rs.
1,00,000 in subsequent cycles
• total indebtedness of the borrower
does not exceed Rs. 1,00,000
• tenure of the loan not to be less
than 24 months for loan amount in
excess of Rs. 15,000 with
prepayment without penalty
• loan has to be given without
collateral

8. 8. Factor
• The financial assets should constitute
at least 50 percent of its total assets .
9. Mortgage Guarantee Company(MGC)
• At least 90% of the business turnover
is mortgage guarantee business or at
least 90% of the gross income is from
mortgage guarantee business .
10. Non-Operative Financial Holding
Company(NOFHC)
• promoter / promoter groups will be
permitted to set up a new bank.
11. Residuary Non-Banking
Company(RNBCs)
• business of receiving the deposits,
under any scheme or arrangement or
in any other manner
• required to invest 100 per cent of their
deposit liability into highly liquid and
secure instruments

9. Rules Governing NBFCs
• 50-50 Principal Business Criteria
for NBFC:
Following conditions are required to be
fulfilled to be eligible for NBFC:
 Financial assets should
constitutes more than 50%
of a NBFC’s total assets
 Income from financial assets
constitute more than 50 per
cent of the gross income.
• Owned fund’ and ‘net owned
fund’ in relation to NBFCs:
‘Owned Fund’ = Equity Shareholders
funds + Convertible Preference shares

10. • NBFC Entities which can legally
accept deposits from public
• Housing Finance
Companies
• Cooperative Credit
services
• Other requirements for
accepting deposits
• Limit on Deposits
• Interest Rate on
Deposits
• Tenure of deposits

11. Growth parameters
 Increasing size and systemic
importance
 Stronger Regulatory
Environment leads to higher
capital cover and Better
Risk Management
 Move towards Secured
Lending
 Lower Liquidity Risk
 Stronger Lending
Infrastructure
 Rising number of large
players – backed by big
corporate houses
 Diversification and
Mortgage Based lending
 Changing Order

12. Key Performance
Trends
• Capital Adequacy remains
comfortable.
• Asset quality under pressure
due to economic stress.
• Profitability impacted on
account of slowdown in growth
and asset quality pressure.
• Resource profile continues to
be stable.
• Rise in Total Assets.

13. Other Issues &
Suggestions
• High cost of raising
funds & inaccessibility
to cheap sources
• Limit on deposit
acceptance
• NBFCs cannot accept
deposits from public.

15. • Requirement of
Minimum net worth for
conversion into bank
• Entry barrier-Minimum
net owned funds of Rs.
2 crore is required for
registration.

16. Suggestions
• Simplification of Structure
complexities
• Differential risk weights
for capital adequacy ratio
• Access to refinancing
schemes
• Extension of tax benefits
to NBFCs similar to that
currently available to
banks

17. Thank you