Non banking financial intermediaries
Non Bank Financial Intermediaries
INTRODUCTION
• NBFCs are privately owned, decentralized and relatively small-sized financial intermediaries.
• Some are primarily engaged in fund-based activities and others provide financial services of diverse kinds.
• The former are know as Non Banking Financial Companies (NBFCs) and the latter are known as Non Banking Financial Services
Companies (NBFSCs).
OVERVIEW
• Two parts
1. 1995-96
2. 2002-03
• During 1995-96, NBFCs had undergone radical transformation. • The post 1995 overview is depicted with whatever information is available.
NATURE
• There are thousands of NBFCs and only a small proportion of them report to the RBI.
• The RBI (Amendment) Act, 1997 defines NBFC as an
“institution or company whose principal business is to accept deposits under any scheme or arrangement or in any other manner, and to lend in any manner.”
• As a result, a number of loan and investment companies registered under the Companies act by business houses for the purpose of investment in group companies are now included as NBFCs.
CATEGORIES
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2.
3.
4.
5.
6.
7.
8.
Equipment Leasing Company (ELC)
Hire-Purchase Finance Company (HPFC)
Housing Finance Company (HFC)
Investment Company (IC)
Loan Company (LC)
Mutual Benefit Financial Company (MBFC)
Miscellaneous Non-Banking Company (MNBC)
Residuary Non-Banking Company (RNBC)
IMPORTANCE
• NBFCs perform a diverse range of functions and helps bridge the credit gaps.
• They have served the households, farm, and small enterprise sector on a sustained basis.
• A thriving, healthy and growing non-banking financial sector is necessary for promoting the growth of an efficient and competitive economy.
• The difference between the banks and the NBFCs have blurred over the years.
Regulation of NBFC’s
•
•
•
•
•
•
•
•
In terms of Section 45-IA of the RBI Act, 1934, it is mandatory that every
NBFC should be registered with RBI to
INTRODUCTION
• NBFCs are privately owned, decentralized and relatively small-sized financial intermediaries.
• Some are primarily engaged in fund-based activities and others provide financial services of diverse kinds.
• The former are know as Non Banking Financial Companies (NBFCs) and the latter are known as Non Banking Financial Services
Companies (NBFSCs).
OVERVIEW
• Two parts
1. 1995-96
2. 2002-03
• During 1995-96, NBFCs had undergone radical transformation. • The post 1995 overview is depicted with whatever information is available.
NATURE
• There are thousands of NBFCs and only a small proportion of them report to the RBI.
• The RBI (Amendment) Act, 1997 defines NBFC as an
“institution or company whose principal business is to accept deposits under any scheme or arrangement or in any other manner, and to lend in any manner.”
• As a result, a number of loan and investment companies registered under the Companies act by business houses for the purpose of investment in group companies are now included as NBFCs.
CATEGORIES
1.
2.
3.
4.
5.
6.
7.
8.
Equipment Leasing Company (ELC)
Hire-Purchase Finance Company (HPFC)
Housing Finance Company (HFC)
Investment Company (IC)
Loan Company (LC)
Mutual Benefit Financial Company (MBFC)
Miscellaneous Non-Banking Company (MNBC)
Residuary Non-Banking Company (RNBC)
IMPORTANCE
• NBFCs perform a diverse range of functions and helps bridge the credit gaps.
• They have served the households, farm, and small enterprise sector on a sustained basis.
• A thriving, healthy and growing non-banking financial sector is necessary for promoting the growth of an efficient and competitive economy.
• The difference between the banks and the NBFCs have blurred over the years.
Regulation of NBFC’s
•
•
•
•
•
•
•
•
In terms of Section 45-IA of the RBI Act, 1934, it is mandatory that every
NBFC should be registered with RBI to