Non-Banking Financial Companies
Non-Banking Financial companies
Introduction:
A non-banking finance company may be defined as an institution which mobilizes the savings of the community and diverts them for financing different activities. A bank also performs similar type of activities. Then what is the differesnce between bank and non-banking finance company? The difference can be seen from two points of views.
Firstly, from the legal point of view, bank may be defined as an institution which is governed by the Banking Regulation Act, 1949.
Secondly, a more practical definition of a bank may be that it is an institution which accepts, short and long-term deposits up to an unlimited extent, and money can be withdrawn by drawing a cheque on any accounts maintained with it.
A non-banking financial intermediary does not fulfill any of these two criteria. The activities of non-banking companies are similar to those of banks and they are often referred to as Para banking institutions. Such intermediaries cover a wide range of institution differing in their main activities and the services they offer, the one essential feature being the same, viz., mobilization of the savings of the public and their utilization for financing various types of economic activities.
Non-banking financial companies (NBFCs) are fast emerging as an important segment of Indian financial system. It is an heterogeneous group of institutions (other than commercial and co-operative banks) performing financial intermediation in a variety of ways, like accepting deposits, making loans and advances, leasing, hire purchase, etc. They raise funds from the public, directly or indirectly, and lend them to ultimate spenders. They advance loans to the various wholesale and retail traders, small-scale industries and self-employed persons. Thus, they have broadened and diversified the range of products and services offered by a financial sector. Gradually, they are being recognized as complementary to the banking sector due
Introduction:
A non-banking finance company may be defined as an institution which mobilizes the savings of the community and diverts them for financing different activities. A bank also performs similar type of activities. Then what is the differesnce between bank and non-banking finance company? The difference can be seen from two points of views.
Firstly, from the legal point of view, bank may be defined as an institution which is governed by the Banking Regulation Act, 1949.
Secondly, a more practical definition of a bank may be that it is an institution which accepts, short and long-term deposits up to an unlimited extent, and money can be withdrawn by drawing a cheque on any accounts maintained with it.
A non-banking financial intermediary does not fulfill any of these two criteria. The activities of non-banking companies are similar to those of banks and they are often referred to as Para banking institutions. Such intermediaries cover a wide range of institution differing in their main activities and the services they offer, the one essential feature being the same, viz., mobilization of the savings of the public and their utilization for financing various types of economic activities.
Non-banking financial companies (NBFCs) are fast emerging as an important segment of Indian financial system. It is an heterogeneous group of institutions (other than commercial and co-operative banks) performing financial intermediation in a variety of ways, like accepting deposits, making loans and advances, leasing, hire purchase, etc. They raise funds from the public, directly or indirectly, and lend them to ultimate spenders. They advance loans to the various wholesale and retail traders, small-scale industries and self-employed persons. Thus, they have broadened and diversified the range of products and services offered by a financial sector. Gradually, they are being recognized as complementary to the banking sector due
Bibliography: Books Referred: 1] Banking Theory and Practice: Dr.P.K.Srivastava. 2] Banking Theory, Law and Practice: Gorgon-Natarajan 3] Investment Banking: Vauslt Websites Referred: |1] http://www.ecommercetimes.com | |2] http://ecommerce.internet.com/ | |3] http://www.ilr.cornell.edu/library/reference/guides/ecommerce/ | |4] http://ask.elibrary.com/index.asp |