{"id":5244,"date":"2017-11-27T18:00:27","date_gmt":"2017-11-27T12:30:27","guid":{"rendered":"https:\/\/enterslice.com\/learning\/?p=5244"},"modified":"2020-12-09T14:10:56","modified_gmt":"2020-12-09T08:40:56","slug":"faqs-non-banking-financial-company-nbfc","status":"publish","type":"post","link":"https:\/\/enterslice.com\/learning\/faqs-non-banking-financial-company-nbfc\/","title":{"rendered":"FAQ\u2019s on Non-Banking Financial Company (NBFC)"},"content":{"rendered":"<p><strong>Here are&nbsp;FAQs on Non-Banking Financial Company-<\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Q.1: What is Non-Banking Financial Company (<a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;NBFC&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;Non-Banking Financial Companies (NBFC) operate similarly to banks but do not possess the legal status of a bank. Registered under the Companies Act 2013 and governed by the RBI Act&amp;#039;s section(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/nbfc\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>NBFC<\/a>)?<\/h3>\n\n\n\n<p>Ans.: <strong>NBFC<\/strong> is a Non-Banking Financial Company which the principal business of which is:<\/p>\n\n\n\n<ul><li>lending money or<\/li><li>investing in shares\/stocks\/bonds\/debentures or<\/li><li>leasing hire purchase, or<\/li><li>doing insurance business, chit business or<\/li><li>Receiving deposits under any scheme or arrangement.<\/li><\/ul>\n\n\n\n<p><strong>Note: NBFC is regulated by Reserve Bank of India.&nbsp; <\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Q.2: Is Non-Banking Financial Company (NBFC) similar to Bank?<\/h3>\n\n\n\n<p>Ans.: The difference between an NBFC and a Bank is:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><a href=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2017\/11\/excel-14.png\"><img decoding=\"async\" loading=\"lazy\" width=\"692\" height=\"159\" src=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2017\/11\/excel-14.png\" alt=\" difference between an NBFC and a Bank\" class=\"wp-image-5245\" srcset=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2017\/11\/excel-14.png 692w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2017\/11\/excel-14-300x69.png 300w\" sizes=\"(max-width: 692px) 100vw, 692px\"\/><\/a><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Q.3: What are the types of Non-Banking Financial Company (NBFC)?<\/h3>\n\n\n\n<p>Ans.: There are 2 types of NBFC&rsquo;s, and they are:<\/p>\n\n\n\n<ul><li>Deposit-taking NBFC&rsquo;s.<\/li><li>Non- Deposit-taking NBFC&rsquo;s.<\/li><\/ul>\n\n\n\n<ol><li><strong><em>Deposits Taking Non-Banking Financial Company (NBFC):<\/em><\/strong> There are mainly three types of the deposit accepting NBFC&rsquo;s they can be explained as under:<\/li><\/ol>\n\n\n\n<ul><li>Loan companies,<\/li><li>investment companies,<\/li><li>asset finance companies.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\"><strong>There are some criteria&rsquo;s which are required to be fulfilled by deposit-taking NBFC&rsquo;s<\/strong>:<\/h4>\n\n\n\n<ul><li>They should have a net owned fund of Rs. 2 Crore.<\/li><li>They should mandatorily get <a href=\"https:\/\/enterslice.com\/learning\/insolvency-creditors-rights-systems\/\"><strong>investment credit rating<\/strong><\/a> from any authorized credit rating agency for being eligible to accept deposits from people.<\/li><\/ul>\n\n\n\n<ol><li><strong><em>Non- Deposit taking NBFC:<\/em><\/strong> These are the NBFC&rsquo;s which cannot accept the deposit. They can only lend but cannot accept deposits from public other than paying back of the borrowed money. These types of NBFC&rsquo;s generally depends on Banks, Corporate Houses, and Private Equity Firms, etc. for taking deposits.<\/li><\/ol>\n\n\n\n<p><strong>Non-Banking Companies are further classified on the <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Basis&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;In finance, the &amp;quot;basis&amp;quot; is a term with several applications, including representing the difference between the spot price and the future contract price of an asset, which is vital in investment(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/basis\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>basis<\/a> of their size. <\/strong><\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Q.4: Is every business is allowed to carry on the business of NBFC?<\/h3>\n\n\n\n<p>Ans.: The following business cannot be registered as NBFC:<\/p>\n\n\n\n<ul><li>Any institution whose principal business is of agriculture.<\/li><li>Or any business who is engaged in industrial activity.<\/li><li>Or any institution which is engaged in purchase or sale of any goods (other than securities).<\/li><li>Or which is providing any services.<\/li><li>Or which is engaged in sale\/purchase\/construction of the immovable <a class=\"glossaryLink\"  aria-describedby=\"tt\"  data-cmtooltip=\"&lt;div class=glossaryItemTitle&gt;Property&lt;\/div&gt;&lt;div class=glossaryItemBody&gt;Property refers to the legal designation of ownership over valuable items or assets held by an individual or a business. This ownership grants the holder certain legal rights to use, consume,(...)&lt;\/div&gt;\"  href=\"https:\/\/enterslice.com\/learning\/terms\/property\/\"  data-gt-translate-attributes='[{\"attribute\":\"data-cmtooltip\", \"format\":\"html\"}]'>property<\/a>.<\/li><li>Or any other company whose principal business is receiving deposits under any scheme or arrangement in one lump-sum or in installments by way of contributions or in any other manner.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Q.5: What are the requirements to register as an NBFC?<\/h3>\n\n\n\n<p>Ans.: As per the rules &amp; regulations of <strong>Reserve Bank of India Act<\/strong><sup><a href=\"https:\/\/rbidocs.rbi.org.in\/rdocs\/Publications\/PDFs\/RBIA1934170510.PDF\">[1]<\/a><\/sup>, 1934 &ldquo;No company can commence the business of NBFC unless it has obtained the certificate of <a href=\"https:\/\/enterslice.com\/nbfc-registration\"><strong>NBFC registration<\/strong><\/a> and having a <strong>net owned fund<\/strong> of Rs. 2 Crore&rdquo;.<\/p>\n\n\n\n<p>For registering as an NBFC an application to the Regional Office of RBI should be made along with the required documentation.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Q.6: What are the reasons for the growth of NBFC?<\/h3>\n\n\n\n<p>Ans.:<strong> Reason for the growth of NBFC:<\/strong><\/p>\n\n\n\n<ul><li>NBFC has the ability to understand the customer&rsquo;s profile and offer the best product according to the customers need.<\/li><li>They offer competitive interest rates.<\/li><li>Provide flexible repayment scheme and extended loan tenure.<\/li><li>A minimum number of documents are required at the time of providing financial assistance as compared to banks.<\/li><li>Loan seekers have flexible eligibility criteria.<\/li><\/ul>\n\n\n\n<h3 class=\"wp-block-heading\">Q.7: What is the time period for which NBFC can accept deposit?<\/h3>\n\n\n\n<p>Ans.: A time period has been provided regarding the maximum and minimum time limit for which NBFC can accept the deposit.<\/p>\n\n\n\n<p><strong>Minimum time period<\/strong>: 12 months.<\/p>\n\n\n\n<p><strong>Maximum time period<\/strong>: 60 months.<\/p>\n\n\n\n<p>It is the discretion of deposit accepting NBFC that it can pay back the amount of deposit before its maturity period but such deposit cannot be paid back before 3 months from the date of its acceptance.<\/p>\n\n\n\n<p>If the deposit is paid back after 3 months but before 6 months of its acceptance no interest will be paid.<\/p>\n\n\n\n<p>But if the deposit is paid back after 6 months of its acceptance but before the maturity period then interest shall be paid but that interest shall be lower than 2% of the contracted rate.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\">Q.8.: What are the compliances of Non-Banking Financial Company (NBFC)?<\/h3>\n\n\n\n<p>Ans.:<\/p>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter\"><a href=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2017\/11\/excel-15.png\"><img decoding=\"async\" loading=\"lazy\" width=\"843\" height=\"461\" src=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2017\/11\/excel-15.png\" alt=\" compliances of Non-Banking Financial Company\" class=\"wp-image-5246\" srcset=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2017\/11\/excel-15.png 843w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2017\/11\/excel-15-300x164.png 300w, https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2017\/11\/excel-15-768x420.png 768w\" sizes=\"(max-width: 843px) 100vw, 843px\"\/><\/a><\/figure><\/div>\n\n\n\n<h3 class=\"wp-block-heading\">Q.9: <strong>What is Non-Banking Financial Company (NBFC) Takeover?<\/strong><\/h3>\n\n\n\n<p>Ans: Likewise, any other company takeover of NBFC can also take place. The rules and regulations regarding the takeover of NBFC are regulated by the Reserve Bank of India. So, the<a href=\"https:\/\/enterslice.com\/takeover-of-nbfc\"> <strong>takeover of NBFC<\/strong><\/a> means when any other NBFC acquires the other NBFC it is considered a takeover. Similarly, it can also be done in two different ways i.e. friendly takeover and a hostile takeover.<\/p>\n\n\n\n<div class=\"read\"><p><b>Also, Read:<\/b> <mark><a href=\"https:\/\/enterslice.com\/learning\/post-merger-or-reorganisation-of-a-company\/\">What is Post Merger or Reorganization of a Company?<\/a><\/mark>.<\/p><\/div>\n","protected":false},"excerpt":{"rendered":"<p>Here are&nbsp;FAQs on Non-Banking Financial Company- Q.1: What is Non-Banking Financial Company (NBFC)? Ans.: NBFC is a Non-Banking Financial Company which the principal business of which is: lending money or investing in shares\/stocks\/bonds\/debentures or leasing hire purchase, or doing insurance business, chit business or Receiving deposits under any scheme or arrangement. Note: NBFC is regulated [&hellip;]<\/p>\n","protected":false},"author":4,"featured_media":5248,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[6],"tags":[1269],"acf":{"service_id":"8"},"yoast_head":"<!-- This site is optimized with the Yoast SEO plugin v14.6.1 - https:\/\/yoast.com\/wordpress\/plugins\/seo\/ -->\n<title>FAQs on Non-Banking Financial Company (NBFC)<\/title>\n<meta name=\"description\" content=\"FAQs on Non-Banking Financial Company- As per the rules &amp; regulations of Reserve Bank of India Act, 1934 \u201cNo company can commence the business of NBFC.\" \/>\n<meta name=\"robots\" content=\"index, follow\" \/>\n<meta name=\"googlebot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<meta name=\"bingbot\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/enterslice.com\/learning\/faqs-non-banking-financial-company-nbfc\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"FAQs on Non-Banking Financial Company (NBFC)\" \/>\n<meta property=\"og:description\" content=\"FAQs on Non-Banking Financial Company- As per the rules &amp; regulations of Reserve Bank of India Act, 1934 \u201cNo company can commence the business of NBFC.\" \/>\n<meta property=\"og:url\" content=\"https:\/\/enterslice.com\/learning\/faqs-non-banking-financial-company-nbfc\/\" \/>\n<meta property=\"og:site_name\" content=\"Enterslice\" \/>\n<meta property=\"article:publisher\" content=\"https:\/\/www.facebook.com\/enterslice\" \/>\n<meta property=\"article:author\" content=\"enterslice\" \/>\n<meta property=\"article:published_time\" content=\"2017-11-27T12:30:27+00:00\" \/>\n<meta property=\"article:modified_time\" content=\"2020-12-09T08:40:56+00:00\" \/>\n<meta property=\"og:image\" content=\"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2017\/11\/money-finance-bills-500.jpg\" \/>\n\t<meta property=\"og:image:width\" content=\"1280\" \/>\n\t<meta property=\"og:image:height\" content=\"972\" \/>\n<meta name=\"twitter:card\" content=\"summary\" \/>\n<meta name=\"twitter:creator\" content=\"@enterslice\" \/>\n<meta name=\"twitter:site\" content=\"@enterslice\" \/>\n<!-- \/ Yoast SEO plugin. -->","authorName":"Narendra Kumar","authorImageUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2019\/04\/nk-1.jpg","authorDescription":"Experienced Finance and Legal Professional with 12+ Years of Experience in Legal, Finance, Fintech, Blockchain, and Revenue Management.","postViews":806,"readingTime":3,"nextPost":{"id":5250,"slug":"frequently-ask-questions-faqs-on-producer-company"},"prevPost":{"id":5241,"slug":"dividend-declaration-nbfc"},"featuredMediaUrl":"https:\/\/enterslice.com\/learning\/wp-content\/uploads\/2017\/11\/money-finance-bills-500.jpg","postTerms":"NBFC","_links":{"self":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/5244"}],"collection":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/users\/4"}],"replies":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/comments?post=5244"}],"version-history":[{"count":0,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/posts\/5244\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media\/5248"}],"wp:attachment":[{"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/media?parent=5244"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/categories?post=5244"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/enterslice.com\/learning\/wp-json\/wp\/v2\/tags?post=5244"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}