nbfc move to home loan

8/7/2019 Nbfc Move to Home Loan

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NBFC MOVING IN TONBFC MOVING IN TOHOUSING LOANHOUSING LOAN

Presented By :

Sachin Gawade - 14Ritesh Joshi - 20

Vivek Bhandari - 04Dinesh Poojari - 38Mukesh Shetty - 45 Ashish lakhani - 23

Presented By :

Sachin Gawade - 14Ritesh Joshi - 20

Vivek Bhandari - 04Dinesh Poojari - 38Mukesh Shetty - 45 Ashish lakhani - 23



NBFC is a company registered under the Companies Act, 1956.

Non banking Financial Company has been defined as

(i) a financial institution, which is a company;

(ii) a non-banking institution, which is a company and which has its principalbusiness the receiving of deposits under any scheme or lending in anymanner.

(iii) Such other non-banking institutions, as the bank may with the previousapproval of the central government and by notification in the official gazette,specify.

(iv) Engaged in business of loans and advances, acquisition of shares/stock/bonds/debentures/securities issued by Government or localauthority or other securities of like marketable nature, leasing, hire-

purchase, insurance business,



Originally , NBFC·s registered with RBI were classified as

Equipment Leasing Company ;Hire - Purchase Company;Loan Company ;Investment Company

However With effect from 6 th December 2006 the above NBFC·s registeredwith RBI have been reclassified as

Asset Finance Company (AFC)Investment company(IC)Loan Company (LC)



NBFCs are doing functions akin to that of banks however there are afew differences:

1.NBFC cannot accept demand deposits.

2. NBFC is not a part of the payment and settlement system and assuch an NBFC cannot issue cheques drawn on itself

3. Deposit insurance facility of Deposit Insurance and CreditGuarantee Corporation is not available for NBFC depositorsunlike in case of banks.



Minimum net owned fund of Rs 25 lakh (raised to Rs 200lakh i.e. April 21, 1999).

All NBFCs are not entitled to accept public deposits. Onlythose NBFCs holding a valid Certificate of Registration withauthorization to accept Public Deposits can accept/holdpublic deposits.

NBFCs authorized to accept/hold public deposits besideshaving minimum stipulated Net Owned Fund should alsocomply with the Directions such as investing part of thefunds in liquid assets, maintain reserves, rating etc. issuedby the Bank.



Maximum rate of interest an NBFC can offer is12.5%.NBFCs are allowed to accept/renew publicdeposits for a minimum period of 12 months andmaximum period of 60 months. They cannotaccept deposits repayable on demand.

NBFCs cannot offer gifts/incentives or any otheradditional benefit to the depositors.

NBFCs (except certain AFCs) should haveminimum investment grade credit rating.

The deposits with NBFCs are not insured.



Repayment of deposits by NBFCs is notguaranteed by RBI.

Certain mandatory disclosures are to be made

about the company in the Application Form issuedby the company soliciting deposits.

Effective from April 24, 2004, NBFCs cannotaccept deposits from NRIs except deposits bydebit to NRO account of NRI provided.

Know The Customer should be the key guidingprinciple for identification of an individual /corporate customer .



1990- Golden Days.

Non Banking Financial Companies (NBFCs) in India were having golden days during1990s. Their heady days were fueled with the rapid industrial growth due to liberalizationin 1991, simple resource-raising regulations and eager & greedy investors ready to puttheir saving into any finance company.

1997- Industrial SlowdownGrowth-at- any-cost was the strategies of some of the NBFCs. Moreover, due to this manyweak NBFCs could not pay the hefty interest during the industrial slowdown during 1997bringing to an end the golden period (or otherwise) of NBFCs.

1998-2000- Downgrade Credit Ratings & RBI tightening .

The rating agencies downgraded many companies which was followed by the RBItightening the resource raising and prudential norms in January 1998. It should be notedthat during the 36-month period from April'97 to March'00, Crisil downgraded 149NBFCs due to their deteriorating business and financial risk profiles and creditfundamentals.



Whether the NBFCs, which have traditionallydominated the market of retail finance (likebill discounting, ICDs financing and the carfinance business), can meet the challenges ofthe future. If yes, then how and what shouldbe the role of RBI and other regulatoryauthorities while governing the financialmarket ?



During the period of 2002-2007 CAGR was >30 %.

Total Indian Market estimated around`

5 trillon , 60% out of that controlledby banks and the rest by housing finance companies.

HDFC is major player owning`

1.06 trillion asset in September 2010.

Three NBFC Edelweiss Capital , Mutthoot Finance & DHFL are planningto setting up Subsidiary or acquiring business from banks to tap India·s fastgrowing mortgage market.

Expected to Increase competition to those who is already operating in thisArea but result could be good for customer



Muthoot Finance to set up home loansupplementary

Approach towards

housing financebusiness

Rashesh Shah, Chairman,Edelweiss

Thomas Muthoot ,CMD , Muthoot

Group



Strength

1. Penetration to Market . Nocustomer.

2. Depth of Lending Knowledge.

3. Availability of Resources.

Weaknesses1. Impact of Documentation fees and

Legal Charges.

2. Delays in Documentation /taxesclearance resulted in to increase inGap between change in demand& d market response to it.

3. Cost Of funds compare to Largeexisting Companies.

Opportunities

1. Increase in Demand for ResidentialProperty in Tier II cities like Pune

Chandigarh.2. Social Status & Goal of Buyer.

3. Back up Securities .

4. Great demand for Modern OfficeBuilding Commercial Spaces

Threats

1. Infrastructure .

2. Size of the Company.

3. Existing player strength.



1. Housing Finance Industry will be able to maintain higher growth infresh origination of residential home loan over next five years.

2. Increase affordability due to1. Decrease in property price.2. Affordable interest rates.3. Rising proportion of Double income household.4. Renewed Confidence in Higher income Generation.5 . Availability of various financing option.6. Reassurance of Job security

3. Estimated further boost the impact of increased affordability leading thissector steady & comfortable growth.



THANK YOU

nbfc move to home loan

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