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For the rapidly growing Indian economy, Non-Banking Financial Institutions (NBFC) is playing a vital role in the economic development of the country. NBFC helps in the mobilization of resources which as a result converts the savings into investment. NBFCs provide long term and specialized credit facility and attracts foreign grants. NBFCs facilitate all the banking related financial facility. To keep the services of the client updated and to meet the needs of specific client NBFC keep their services flexible.
Table of Contents
Any company registered under the Companies Act 2013 and desirous of commencing the business of Non-Banking Financial Institutions should comply with the following conditions-
NBFCs as specified performs the following functions-
NBFCs are playing a crucial role in the development of the infrastructure, employment generation, in the creation of wealth, economic development and especially the weaker sections of the society.
Note* A Non-banking Financial Company cannot commence or carry on the business of a non-banking financial institution without obtaining a COR (Certificate of Registration) from the Reserve Bank of India and without having a Net Owned Funds of Rs 200 lakh.
In India, there are 8 types of NBFC registration:
The Applicant company has to comply with the following conditions for getting the COR (Certificate of registration).
Once the registration process gets completed, the applicant company needs to follow the NBFC compliances and instruction issued by the RBI-
As per last audited balance sheet, NBFCs having an asset size of ₹ 500 crores or more are considered as systemically important NBFCs. The systematic classification is that the activities of such NBFCs will have a bearing on the financial stability of the overall economy.
The NBFC sector has grown well in the last few years and playing the critical role in a country which as a result will boost the economy in the right direction.
Non-Banking Financial Institutions are engaged in the business of accepting deposits, delivering credit and play a vital role in channelizing the scarce financial resources to capital formation. The working of the NBFC is as similar as the banking sector in meeting the increasing financial needs of the corporate sector as well as the weaker section of the society and further delivering credit to the unorganized sector and to small local borrowers. In India, despite being different from banks and their activities, NBFC is bound by the Indian banking industry rules and regulations.
Exception NBFC does not include services related to –
Sale, purchase or construction of the immovable property.
For more information, please download e-book on NBFC:
Read our article:What are the Regulatory Requirements of Non-Banking Financial Company in India?
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