A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business. NBFC's are under purview of Reserve Bank of India and any company wanting to register as NBFC must make the requisite application to Regional Office of Reserve Bank of India.
NBFC functions just like banks in providing loan and credit facilities.
NBFCs can trade money market instruments.
NBFC’s can manage portfolios of stocks and shares.
NBFCs lend and make investments and hence their activities are akin to that of banks, however there are a few differences such as NBFC cannot accept deposits, NBFC’s do not form part of the payment and settlement system and cannot issue cheques drawn on itself, Deposit Insurance and Credit Guarantee Corporation are not covered by NBFC Depositors.
‘Owned Fund’ means aggregate of the paid-up equity capital, preference shares which are compulsorily convertible into equity, free reserves, balance in share premium account and capital reserves representing surplus arising out of sale proceeds of asset, excluding reserves created by revaluation of asset, after deducting there from accumulated balance of loss, deferred revenue expenditure and other intangible assets.
'Net Owned Fund' is the amount as arrived at above, minus the amount of investments of such company in shares of its subsidiaries, companies in the same group and all other NBFCs and the book value of debentures, bonds, outstanding loans and advances including hire purchase and lease finance made to and deposits with subsidiaries and companies in the same group, to the extent it exceeds 10% of the owned fund.
Banks, including co-operative banks, can accept deposits. Non-bank finance companies, which have been issued Certificate of Registration by RBI with a specific license to accept deposits, are entitled to accept public deposit.
All NBFCs are not entitled to accept public deposits. Only those NBFCs to which the Bank had given a specific authorization and have an investment grade rating are allowed to accept/ hold public deposits to a limit of 1.5 times of its Net Owned Funds.
NBFCs cannot accept deposits from NRIs except deposits by debit to NRO account of NRI provided such amount does not represent inward remittance or transfer from NRE/FCNR (B) account. However, the existing NRI deposits can be renewed.
It is illegal for any financial entity or unincorporated body to make a false claim of being regulated by the Reserve Bank to mislead the public to collect deposits and is liable for penal action under the Indian Penal Code. Information in this regard may be forwarded to the nearest office of the Reserve Bank and the Police.
I am writing to let you know how much I appreciate the outstanding customer service that your staff provided. Your staff was very attentive and helpful. The employees I interacted with, were very knowledgeable about process, they genuinely interested in helping me. You have put together a great team that makes customers feel respected and valued. I will continue to do business with Filingenie in the future, as well as recommend it to others.