Balance Sheet and Non-banking Financial Company

Only available on StudyMode
  • Download(s) : 660
  • Published : April 19, 2011
Open Document
Text Preview
NBFC is the abbreviation of Non-Banking Financial Company,[1] a company registered under the Companies Act, 1956 of India, engaged in the business of loans and advances, acquisition of shares, stock, bonds, debentures and securities issued by government or local authority, or other securities of a marketable nature, leasing, hire-purchase, insurance business, or chit business: but does not include any institution whose principal business is that includes agriculture or industrial activity; or the sale, purchase or construction of immovable property.[2]

Difference between NBFCs & Banks

NBFCs perform functions similar to that of banks; however there are a few differences in that an NBFC cannot accept demand deposits; an NBFC is not a part of the payment and settlement system and as such, an NBFC cannot issue cheques drawn on itself; and deposit insurance facility of the Deposit Insurance and Credit Guarantee Corporation is not available for NBFC depositors, unlike banks.

|NBFC Registration in India | |The reserve bank of India regulates the working and operations of NBFC within the framework of the Reserve Bank of India Act, 1934 and | |the directions issued by it under the act. According to RBI act, NBFC is Non-banking financial company, which is registered under the | |Companies Act, 1956 of India and is engaged in the business of loans and advances, acquisition of shares/ debentures | |/stock/bonds/securities issued by government or local authority. | | | |Under the Act, it is compulsory for a NBFC to get itself registered with the RBI as a deposit taking company. This NBFC registration | |authorizes it to conduct its business as an NBFC. For the registration with the RBI, a company incorporated under the Companies Act, | |1956 and eager of commencing business of non-banking financial institution, should have a minimum net owned fund of Rs 25 lakh.The NBFC | |registration in India involves submission of an application by the company in the prescribed format along with the compulsory documents | |for RBI's consideration. If the bank is satisfied that the conditions enumerated in the RBI Act, 1934 are fulfilled, it issues a | |'Certificate of Registration' to the company. Only those NBFCs holding a valid Certificate of Registration can hold public deposits. The| |NBFCs accepting public deposits should comply with the Non-Banking Financial Companies Acceptance of Public Deposits Directions, 1998, | |as issued by the bank. | |NBFC Registration in India | |The reserve bank of India regulates the working and operations of NBFC within the framework of the Reserve Bank of India Act, 1934 | |and the directions issued by it under the act. According to RBI act, NBFC is Non-banking financial company, which is registered | |under the Companies Act, 1956 of India and is engaged in the business of loans and advances, acquisition of shares/ debentures | |/stock/bonds/securities issued by government or local authority. | | | |Under the Act, it is compulsory for a NBFC to get itself registered with the RBI as a deposit taking company. This NBFC | |registration authorizes it to conduct its business as an NBFC. For the registration with the RBI, a company...
tracking img