NBFC…THE FORMAL WAY OF DOING FINANCE BUSINESS IN INDIA…….KNEE OF OVERALL FINANCE BUSINESS
WHY NBFC:
It’s a formal way of doing
finance business in India , not as a bank but not less than Bank.
The rapidly-growing Indian economy has provided the
biggest & profitable opportunity to Non-Banking Financial Companies (NBFCs)
in creating a niche for themselves in recent years.
The NBFCs do not hold banking licenses but they
offer almost every service that banks do including accepting deposits, offering
loans, performing financial intermediation, offering cash advances, leasing,
hire purchases, etc.
In a thickly populated country like India,
mainstream banking services are not capable of fulfilling the financial needs
of all the citizens. Owing to this fact, the NBFC has been able to carve a
space for itself by making inroads into the country.
NBFCs have grown at a remarkable pace in the last
decade as a consequence of their customer-friendly approach, great flexibility,
and attractive rate of returns. They cater to the urban and the rural, the
needy and the deprived, as they have penetrated small towns and villages.
The Areas of Business of NBFCs
Wide scope of business opportunities of NBFCs
are…..
- Acquisition of shares/
stocks/ securities/ bonds/ debentures issued by the Government or other
authorities,
- Loans and Advances, all
kind of loans from Micro Finance to Macro Finance
- Insurance Business,
- Chit Business,
- Hire-purchase,
- Leasing.
RBI clearly defines the domains which cannot be
touched by the NBFCs:
- agricultural activity,
- industrial activity,
- purchase or sale of any
goods (other than securities), or
- providing any services,
sale or purchase, or construction of the immovable property.
Different Categories of NBFCs Registered With RBI
The NBFCs are categorized here based on the kind of
activity they primarily undertake, knowing about them shall provide you insight
as to your own preferences.
- Non-Banking Financial
Company-Micro Finance Institution
- Infrastructure Debt Fund
Non- Banking Financial Company
- Systemically Important
Core Investment Company
- Non-Banking Financial
Company-Factors
- NBFC- Non-Operative
Financial Holding Company
- Mortgage Guarantee
Companies
- Infrastructure Finance
Company
- Asset Finance Company
- Investment Company
- Loan Company
Eligibility Norms For Registration of NBFCs
Prerequisite before getting NBFC Licence from RBI
- Company should be
registered under the Companies Act, 2013 or Companies Act, 1956
- Company should have
Minimum Net Owned Fund of INR 2 crore
- Rich experience with
Finance Field of the Directors in addition to other formalities.
The Procedure of Registration of NBFCs
It shall be beneficial for you to know in brief
about the procedure of Registration of NBFC:
- First formality is an
incorporation of the applicant company under the Companies Act, 1956 or
2013, with Minimum
- Net Owned Fund of INR 2
crore (Equity Share Capital & not Preference Share Capital).
- Thereafter the applicant
company needs to open a Bank Account and keep the entire sum of INR 2
crores in the bank’s deposit account, which should be free from all liens.
- The applicant is then
required to apply for registration online on RBI’s official website.
- Post submission of the
form, CARN (Company Application Reference Number) is generated that is
helpful in future references.
- Subsequently, the hard
copies of all the documents are required to be submitted to the concerned
Regional Office of RBI.
- The Regional Office shall
scrutinize the authenticity of the documents and on being satisfied, shall
forward it to the Central Office.
- The Central Office of RBI
grants the NBFC registration only after the fulfilment of all prescribed
requirements by the company under section 45-IA, of its act of 1934.
It is heard commonly that generally RBI do not give licence to every
applicant, that’s true but if it is managed professionally with adequate pre
due deligence of all documents, records and certifications in addition to
detailed business plan, then it is not difficult to get licence from RBI in
scheduled time.
FUTURE OF NBFC IN INDIA………….
It’s an era of Good Governance and the day will come, only formal finance sources
will work, where the NBFC will play the pivotal role in the whole finance
sector
County like India, which is over populated and having potential of huge
opportunities for business, profession and vocations including services. There
is huge gap of demand and supply of finance because the formal banking sector
is not enough to meet all needs of the time and everybody does not fit into the
fixed criteria framed for giving loans and advances, where the role of NBFC
COMPANIES COMES, and there are huge demand developed in last couple of years.
Now a days , micro and small finance need and its supply became the talk of
the people. People are being educated and comes to know about the Creditworthy
ness- Importance of CIBIL and also came to know that without finance, any small
or big business is not possible. NBFC coming forward to meet the need of all
baskets by liberalising some strick norms and applying practical approach of
looking towards genuineness of business, gravity of need and creditability and
so on and so forth.
Young Generation, MSME, Micro Finance and Start-up
are the most driving force for this Finance business. SIBIL control is the most
safeguard provided to NBFC business in addition to flexibility for charging
Interest and compliance charges are the most important factors for the growth
and profitability of this Finance Sector.
THIS
IS THE ERA OF GOOD GOVERNANCE AND NON COMPLIANTE COST IS ALWAYS MANY TIMES
HIGHER THAN COMPLIANCE…….HENCE TO WORK IN AND WITH GOOD GOVERNANCE IS THE
ULTIMATE WIN……………………………
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