Can any one please tell me definition of 'Financial Assets' in context to NBFC.
Regards,
CS Pooja
Shraddha Shukla
(Corporate law Consultant)
(346 Points)
Replied 15 September 2010
RBI Press release dated 08/04/1999 provides as follows:
“A company will be treated as an NBFC if its financial assets are more than 50 per cent of its total assets (netted off by intangible assets) and income from financial assets should be more than 50 percent of the gross income. Both these tests are required to be satisfied as the determinant factor for principal business of a company.”
According to me
"financial assets" here means the main business assets of "financial institution" as defined in Section 45-I(c). For example, financial assets in case of financing company will be its loans & advances whereas in case of investment company, its investments and so on.
In case of investment company, investment in shares of all companies, whether private or public and whether listed or unlisted, will be covered in financial assets.
CS Pooja
(Company Secretary)
(305 Points)
Replied 15 September 2010
Now please clarify the following case..
If there is one public company..which has not been registered with RBI. It is financial and corporate support management service provider company. One of its object is ' to provide loans to bodies corporate' . Now it wanst to provide loans to only group companies. Then do i have to register my company as NBFC or i can give the loan under Section 372A of the Companies Act, 1956.
Its urgent..Please clarify
sunil prakash jain
(Sr.manager)
(101 Points)
Replied 08 October 2010
First check whether you fall in 50:50 criteria if not then no need for NBFC.
After giving the loan you may have interest income in that case you also check 50:50 criteria.
Regards
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