RBI Act, 1934

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vivek keserwani (Querist)
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10 March 2008 Can a Partnership Firm carrying on the banking business get itself Scheduled in the SECOND SCHEDULE OF RBI ACT, 1934 ?

R.V.RAO

R.V.RAO (Expert)
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11 March 2008 Section 45-1(f) of RBI Act, 1934 defines a Non-Banking Finance Company (NBFC) as-

a financial corporation which is a company,
a non-banking institution which has as its principal business, the receiving of deposits under any scheme or arrangement or in any other manner or lending in any manner,
Such other banking institution or class of such institution as the RBI may, with previous approval of the Central Government and by notification in official gazette, specify.
NBFCs are classified into the following:

(i) Hire purchase finance company, that is to say, a company which carries on, as its principal business hire purchase transactions or the financing of such transactions.

(ii) Investment company, that is to say, a company which carries on, as its principal business, acquisition of shares, stocks, bonds, debentures, debenture stock or securities issued by the government or local authority, or other marketable securities of a like nature.

(iii) Housing finance company, that is to say, a company which carries on, as its principal business, the business of financing of acquisition or construction of houses including acquisition or development of land in connection therewith.

(iv) Loan company, that is to say, a company ( not being company referred to in sub para (i) to (iii) which carries on as its principal business, the business of providing finance, whether by making loans or advances or otherwise.

(v) Mutual fund finance company, that is to say, a company which carries on as its principal business acceptance of deposits from its members and which is declared by the Central Government under Section 620A of the Companies Act,1956(1 of 1956) to be Nidhi or Mutual Benefit Society.

(vi) Miscellaneous finance company, that is to say, a company which carries on exclusively, or almost exclusively, two or more classes of business referred to in the preceding sub-paras.

As per the Reserve Bank of India Act, 1934, banks in India are classified into scheduled and non-scheduled banks. Scheduled banks are those which are entered into the second schedule of the RBI Act, 1934. It includes those banks which have a paid-up capital and reserves of an aggregate value of not less than Rs.5 lakhs and which satisfy RBI that their affairs are being carried out in the interests of the depositors. While, non-scheduled banks are those which have not been included in the second schedule of the Act. The scheduled banks comprise scheduled commercial banks and scheduled cooperative banks. Further, the scheduled commercial banks in India are categorised into five different groups according to their ownership and/or nature of operation
YOU MAY MEET LOCAL RBI IN YOUR PLACE OR AT NEAREST RBI OFFICE TO FIND OUT ELIGIBILITY AS PER CRITERION STATED ABOVE FOR A BANK OR FOR AN NBFC.
IT IS RBI DISCRETION TO ADMIT OR REJECT THE APPLICATION AS BANK OR AS NBFC.
R.V.RAO