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Incorporation

CS Pooja (Company Secretary) (305 Points)

15 September 2010

Dear All,

I want to incorporate one Construction and other Equipment renting company. Will it be treated as 'Equipment Leasing Company' and consequently NBFC?

Regards'

CS Pooja

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4 Replies

Manmohan ACA, CS (Chartered Accountant ) (14243 Points)
Replied 15 September 2010

The NBFCs that are registered with RBI are:

(i) equipment leasing company;
(ii) hire-purchase company;
(iii) loan company;
(iv) investment company.

With effect from December 6, 2006 the above NBFCs registered with RBI have been reclassified as

(i) Asset Finance Company (AFC)
(ii) Investment Company (IC)
(iii) Loan Company (LC)

AFC would be defined as any company which is a financial institution carrying on as its principal business the financing of physical assets supporting productive / economic activity, such as automobiles, tractors, lathe machines, generator sets, earth moving and material handling equipments, moving on own power and general purpose industrial machines.

Principal business for this purpose is defined as aggregate of financing real/physical assets supporting economic activity and income arising therefrom is not less than 60% of its total assets and total income respectively.