know about nbfc stands for non-banking financial company
DESCRIPTION
NBFC stands for Non-Banking Financial Company. It is a financial institution registered under the Companies Act of 1956 that operates similar to a bank but does not hold a banking license. They are also referred to as NBFIs or Non-Banking Financial Institutions.TRANSCRIPT
WHAT IS AN NBFC?
By: Narendra Pratap
NBFC• NBFC stands for Non-Banking Financial Company.• It is a financial institution registered under the Companies Act of 1956 that operates similar to a bank but does not hold a banking license. • They are also referred to as NBFIs or Non-Banking Financial Institutions.
Features of an NBFC
NBFCs are not institutions whose principal business involves activities related to agriculture, industry, trading in property
Difference Between Banks and NBFCs
• Unlike banks, NBFCs Cannot accept demand deposits, insure deposits or issue self-drawn cheques. They also do not participate in the settlement cycle.
Who regulates NBFCs in India?The RBI primarily regulates those NBFCs or NBFIs which are not governed by specific regulators.
For e.g. Housing Finance Companies are regulated by the National Housing Board (NHB), Venture Capital and Stock Broking Companies are regulated by the Securities and Exchange Board of India (SEBI), Insurance Companies are regulated by the Insurance Regulatory and Development Authority (IRDA) etc.
Such non-banking institutions are not regulated by RBI to avoid the confusion of being regulated by two authorities.
All About NBFIsNBFCs are not as strictly regulated as banks. . A list of NBFCs who can accept public deposits is available on the RBI website: www.rbi.org.in
What is an RNBC?
• An RNBC is a Residuary Non-Banking Company whose principal business is the acceptance of deposits. They do not deal with loans and investments. They accept deposits through different avenues compared to NBFCs. The number of RNBCs and the amounts collected by them as deposits has dwindled after the RBI decided to call for the shutting down of RNBCs.
Significance of NBFCs in the Indian financial market
NBFCs are of growing importance to the Indian financial system and strongly complement the Indian banking sector which cannot adequately meet the diversified financial needs of all investors.
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