ARTIS MANAGEMENT CONSULTANTS PRIVATE LIMITED, TRIVANDRUM, KOCHI, BANGALORE, MUMBAI , AURANGABAD

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FAQ's — FAQs details

FAQ Details

1. What is a Non-Banking Financial Company (NBFC)?
A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956
and is engaged in the business of loans and advances, acquisition of shares/stock/bonds/debentures/securities issued by Government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business
but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale/purchase/construction of immovable property.
A non-banking institution which is a company and which has its principal business of receiving deposits under any scheme or arrangement or any other manner, or lending in any manner is also a non-banking financial company (Residuary non-banking company).

2. Is there any difference between NBFC's and Banks?
NBFCs are similar to bank , however there are a few differences:
a NBFC cannot accept demand deposits; it is not a part of the payment and settlement system and as such cannot issue cheques to its customers;
and deposit insurance facility of DICGC is not available for NBFC depositors unlike in case of banks.

3. Is it necessary that every NBFC should be registered with RBI?
It is mandatory that every NBFC should be registered with RBI to commence or carry on any business of non-banking financial institution
Following categories are exempted from registration.

Venture Capital Fund/Merchant Banking companies/Stock broking companies registered with SEBI,
Insurance Company holding a valid Certificate of Registration issued by IRDA, Nidhi companies as notified under Section 620A of the Companies Act, 1956, Chit companies
Housing Finance Companies regulated by National Housing Bank.

4. What are the requirements and procedure for registration with RBI?
The applicant should be a company incorporated under the Companies Act, 1956 and desirous of commencing business of non-banking financial institution
Should have a minimum net owned fund of Rs 200 lakh.
The company is required to submit its application for registration in the prescribed format along with necessary documents for Bank's consideration.
The Bank issues Certificate of Registration after satisfying itself that the conditions as enumerated in Section 45-IA of the RBI Act, 1934 are satisfied.

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