Advisory Services
Audit
Consulting
ESG Advisory
RBI Registration
SEBI Registration
IRDA Registration
FEMA Advisory
Compliances
IBC Services
VCFO Services
Growing
Developing
ME-1
ME-2
EU-1
EU-2
SE
Others
Select Your Location
NBFC or Non-Banking Financial Company is a company that is registered under the Companies Act, 2013 or the Companies Act, 1956[1], as defined by the Government of India. NBFCs are exclusively involved in the insurance business, lending business, leasing, hire-purchase, receiving deposits in certain cases, stocks and shares acquisitions, and chit funds. Reserve Bank of India and the Ministry of Corporate Affairs are responsible for managing the functions of all different types of NBFC.
Table of Contents
The NBFC categorization is done under two boards, that are defined on:
In obedience to the above-mentioned categorization, NBFC companies are categorized as below:
Deposits Basis:
Activity Basis:
Unlike Banks, different types of NBFC are responsible for only lending money or making investments. Other significant differences include:
Below we are giving the overview of the different types of NBFC:
The NBFC-ICC comprises three three types of NBFC i.e. Asset Finance, Loan and Investment Company.
IFC provided companies are those who has net owned funds of at least 300 crores and has deployed at least 75% in total assets in infrastructure loans. An IFC company has CRAR of 15% and a credit rating of A and above.
A CIC-ND-SI is a company that has assets of over 100 crores and above and has deployed at least 90% of its assets in a manner of investments like loans in group companies, and shares. There is a regulation with this division as well, i.e. out of 90% at least 60% should be invested in equity shares or instruments that are converted in equity shares. However, it should be noted that SICIC companies do accept public funds.
Infrastructure Debt Fund of IDF-NBFC is an investment pool in which the main standing is the fixed income investment. Moreover, the IDF-NBFC is meant to divert funds towards the infrastructure sector. Because of the huge investment requirements and a long gestation period, in the infrastructure industry, IDF-NBF companies are required. It should be noted that in India, IDF companies can be set up as a trust. Such funds are known as IDF-MF regulated by the SEBI.
The microfinance institution registered as NBFC is a non-deposit by nature and has at least 85% of its assets in the form of microfinance. Such kinds of micro-finance are given in the form of loans to people who have an annual income of 60,000 INR in a rural area or 120,000 in the urban area. The loans cannot exceed more than 50,000 INR and its tenure is not less than 24 months. Repayments of loans are done weekly (fortnight or monthly according to the choice of the borrower) and are given without collateral.
NBFC-Factor is a non-deposit taking NBFC engaged in the principal business of factoring. The financial assets in the factoring business should constitute at least 50 percent of its total assets and its income derived from factoring business should not be less than 50 percent of its gross income.
MGC are financial institutions for which at least 90% of the business turnover must be from mortgage guarantee business and the net owned fund is Rs. 100 crore.
In case you are interested in incorporating an NBFC, then the following mentioned documents are to be submitted, however, the documents may be different in case of different types of NBFC:
The principal business of any NBFC category is uniquely described by the RBI which gives clear instruction on its formation. In case you are willing to register your company as NBFC, then it is advised to check rules and regulations from the RBI website.
Complete Overview of the World Fintech Industry
Read our article:Prerequisites of NBFC Registration
Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.
The Financial Action Task Force, i.e. FATF (the Force), is the global money laundering and terr...
Advance tax refers to the payment of the tax liability before the end of the relevant financia...
On 11.12.15, the Hon’ble Delhi High Court (HC) pronounced a landmark judgement in the case ti...
Money laundering can be defined as the process of illegal concealment of the origin of money ob...
Every assessee in India is obligated to file an income tax return and make the timely payment o...
In the recent past, India has seen burgeoning demand for internet and smartphones. The rapid ri...
The Securities and Exchange Board of India (SEBI), the capital markets regulator, has recommend...
The objective of the enactment of the Prevention of Money-laundering Act, 2002, i.e. PMLA (the...
Tax planning is a continuing effort and a management strategy for ensuring the minimization of...
On 18th May 2023, the Securities Exchange Board of India (SEBI) released a Consultation Paper o...
Are you human?: 1 + 9 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
In the recent (landmark) judgment delivered by NCLT Mumbai in the case of Harsh Pinge Vs Hindustan Antibiotics Limi...
18 Apr, 2020
Non-banking financial companies (NBFCs) are fast emerging as an important segment of the rapidly growing Indian eco...
01 May, 2017
Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work.
Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.
Stay updated with all the latest legal updates. Just enter your email address and subscribe for free!
Chat on Whatsapp
Hey I'm Suman. Let's Talk!