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Non-Banking Financial Company (NBFC)

By: Raja Asif Nawaz)

CONTENTS

• NBFC- Definition• Role of NBFC• Difference Between Banks & NBFC• Major NBFCs in India• Aditya Birla Finance Limited(ABFL)

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A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956• engaged in the business of loans and advances, acquisition of

shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property.

• A non-banking institution which is a company and has principal business of receiving deposits under any scheme or arrangement in one lump sum or in installments by way of contributions or in any other manner, is also a non-banking financial company (Residuary non-banking company).

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“principal business”• Financial activity as principal business is when a company’s financial

assets constitute more than 50 per cent of the total assets and income

from financial assets constitute more than 50 per cent of the gross

income.

• A company which fulfils both these criteria will be registered as NBFC by

RBI.

• popularly known as 50-50 test and is applied to determine whether or

not a company is into financial business.

Role of NBFC

• Development of sectors like transport & Infrastructure.• Substantial employment generation.• Help and increase wealth creation.• To finance economically weaker sections.• Broder Base economic Development.

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Difference between Banks & NBFCs

• NBFC cannot accept demand deposits;• NBFCs do not form part of the payment and settlement system and

cannot issue cheques drawn on itself;• Deposit insurance facility of Deposit Insurance and Credit Guarantee

Corporation is not available to depositors of NBFCs, unlike in case of banks.

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Aditya Birla Finance Limited(ABFL)

• Rakesh singh- CEO • Aditya Birla Fin ance Lim ited (AB FL) is one of India's most re puted non-

ba nki ng fin ancial companies (NBFC).• Incorporate d in 1991 , th e company was certified as ISO 9001:2008

across all its core functional processes in March 2013 by BSI, a leading global independent business services organization.

• They offer c ustomized solutions in areas of Capital Market, Corporate Finance, Commercial Real Estate & Mortgages and Infrastructure, Project & Structured Finance.

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Sources:1. https://www.rbi.org.in/Scripts/FAQView.aspx?Id=922. http://adityabirlafinance.com/about-us/overview.aspx

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