Non-bank financial companies ( NBFCs ) are financial institutions that provide banking services without meeting the legal definition of a bank, i.e. one that does not hold a banking license. These institutions typically are restricted from taking deposits from the public depending on the jurisdiction. Nonetheless, operations of these institutions are often still covered under a country's banking regulations.

1. Project on
NBFC
Group Members:
Adil Garg
Ankur Agarwal
Anshul Gupta
Ayush Jain
Siddhant Kumar
Varsha Maheshwari

2.  A Non-Banking Financial
Company (NBFC) is a financial
institution registered under
company act 1956 that
provides banking services but
do not hold banking license.
 Restricted from taking
deposits from public.
 Generally NBFCs are engaged
in :
• Loans & Credit facilities.
• Private Education funding.
• Retirement Planning.
• Trading in Money Market.
• Wealth Management
What is NBFC?

3. Regulators of NBFC
NBFCs registered with RBI :
Regulation, supervision,
surveillance under RBI.
National Housing Bank :
Housing Finance Institutions
SEBI :
Merchant Banking Company
MCA:
Nidhi & Mutual Benefit Companies.
IRDA: Insurance Company

4. Categories of NBFC’S
Registered with RBI
1. Asset Finance Company(AFC)
2. Investment Company(IC)
3. Loan Company(LC)
4. Infrastructure Finance
Company(IFC)
• Net owned funds of at least Rs.
300 Crore.
• Deploy at least 75 % of its total
assets in infrastructure loans.
• Minimum credit rating of ‘A ‘or
equivalent.
• CRAR of 15%.

5. 5. Systematically Important Core
Investment Company(CIC-ND-SI)
• NBFC carrying on the business
of acquisition of shares and
securities
• Asset size >=Rs 100 crore
• holds not less than 90% of its
Assets in the form of
investment in equity shares,
preference shares, debt or
loans in group companies
• Out of the 90%, 60% should be
invested in equity shares or
those instruments which can
be compulsorily converted into
equity shares.

6. 6. Infrastructure Debt Fund: Non-
Banking Financial Company(IDF-
NBFC)
• facilitates the flow of long term
debt into infrastructure
projects
• raises resources through issue
of Rupee or Dollar
denominated bonds of
minimum 5 year maturity.

7. 7. Micro Finance
Institution(NBFC- MFI)
• non-deposit taking NBFC which has
at least 85% of its assets in the
form of microfinance
• loan amount does not exceed Rs.
50,000 in the first cycle and Rs.
1,00,000 in subsequent cycles
• total indebtedness of the borrower
does not exceed Rs. 1,00,000
• tenure of the loan not to be less
than 24 months for loan amount in
excess of Rs. 15,000 with
prepayment without penalty
• loan has to be given without
collateral

8. 8. Factor
• The financial assets should constitute
at least 50 percent of its total assets .
9. Mortgage Guarantee Company(MGC)
• At least 90% of the business turnover
is mortgage guarantee business or at
least 90% of the gross income is from
mortgage guarantee business .
10. Non-Operative Financial Holding
Company(NOFHC)
• promoter / promoter groups will be
permitted to set up a new bank.
11. Residuary Non-Banking
Company(RNBCs)
• business of receiving the deposits,
under any scheme or arrangement or
in any other manner
• required to invest 100 per cent of their
deposit liability into highly liquid and
secure instruments

9. Rules Governing NBFCs
• 50-50 Principal Business Criteria
for NBFC:
Following conditions are required to be
fulfilled to be eligible for NBFC:
 Financial assets should
constitutes more than 50%
of a NBFC’s total assets
 Income from financial assets
constitute more than 50 per
cent of the gross income.
• Owned fund’ and ‘net owned
fund’ in relation to NBFCs:
‘Owned Fund’ = Equity Shareholders
funds + Convertible Preference shares

10. • NBFC Entities which can legally
accept deposits from public
• Housing Finance
Companies
• Cooperative Credit
services
• Other requirements for
accepting deposits
• Limit on Deposits
• Interest Rate on
Deposits
• Tenure of deposits

11. Growth parameters
 Increasing size and systemic
importance
 Stronger Regulatory
Environment leads to higher
capital cover and Better
Risk Management
 Move towards Secured
Lending
 Lower Liquidity Risk
 Stronger Lending
Infrastructure
 Rising number of large
players – backed by big
corporate houses
 Diversification and
Mortgage Based lending
 Changing Order

12. Key Performance
Trends
• Capital Adequacy remains
comfortable.
• Asset quality under pressure
due to economic stress.
• Profitability impacted on
account of slowdown in growth
and asset quality pressure.
• Resource profile continues to
be stable.
• Rise in Total Assets.

13. Other Issues &
Suggestions
• High cost of raising
funds & inaccessibility
to cheap sources
• Limit on deposit
acceptance
• NBFCs cannot accept
deposits from public.

15. • Requirement of
Minimum net worth for
conversion into bank
• Entry barrier-Minimum
net owned funds of Rs.
2 crore is required for
registration.

16. Suggestions
• Simplification of Structure
complexities
• Differential risk weights
for capital adequacy ratio
• Access to refinancing
schemes
• Extension of tax benefits
to NBFCs similar to that
currently available to
banks

17. Thank you