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NBFC

khushboo (CS) (234 Points)

26 May 2010

CAN ANYBODY LET ME KNOW THAT ARE THE MAIN BUSINESS OF TYPES OF NBFC

Originally, NBFCs registered with RBI were classified as:

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

However, 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)

WHT DOES ITS MAIN BUSINESS STAND FOR ?????????

AND FURTHER CAN AN INVESTMENT COMPANY CAN GIVE LOAN TO PARTNERSHIP FIRM OR NOT ????

PLZ GUIDE

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2 Replies

(Guest)

If the above co. do one or more business then the main business depend upon % of receip that NBFC receive from business.

in such case the business from which 60% revenue is generated will be considered as the main business.

and a investment co. can give loan to partnership firm but the limit is as follows:

1. for loan or investment only (for single person):- 15% of net own fund

2. loan or investment-(group of person) :- 25% of net own fund.

3.for loan and investment (single person) :- 25 %

4. for loan and investment (group) :- 40%

and here person can be anybody whether it is a partnership firm or co. etc.

and lets wait for others opinion....

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Anand (Chartred Accountant) (435 Points)
Replied 26 May 2010

NBFC are companies other bank which are doing financial business. Before 1998-99 what used to happen was that many dishonest people used to form companies under the Companie Act , to carry on the business of financing. They accepted deposits from public and then flew away, as there were no controlling authoriy (like RBI as in the case of Banks). This prompted government to create an another category of companies called NBFC. Now if any company (other than Banking compay- which are also regulated by the Banking Regulation Act) want to do any business related with banking i.e. accepting of deposits and lending money or financing assets etc. then it has to get approval from RBI and such companies are referred to as NBFC.

In short we can say NBFC are companies i) Registered under companies Act &

ii) They also have to obtain approval from RBI and are thus

have to follow RBI guidelines and Prudential norms.

Apart from Banks and NBFC there are also some partnership firm engaged in the business of finance, like Muthoot Finance. Such Partnership Finance firms are not regulated by RBI.

So as far as your query is concerned, the business of an NBFC is similar to a bank only the regulatory setup is different.

There is no restriction that an NBFC can not give loan to a partnership firm.