Basis activities performed by NBFCs, RBI has differentiated then into different categories irrespective of acceptance of deposit. The deposits could be accepted by a NBFC on specific approval by RBI to do so. All NBFCs are licensed by RBI besides registration under the Companies Act, 2013. As the title suggests, NBFC provides different kind of Banking Services without having Banking license. The NBFCs play a bigger role. in the growing consumption needs of the Indian Populace, in addition to contribution to the growth of Economy.
* Asset Finance Company: Any non-banking company could act as an asset finance company provided income generated from tangible assets supporting the economic activity should be at least 60% of its total assets and total income. The main business of these companies is to finance assets such as Machinery, automobiles, generators, industrial equipment etc. It can either accept deposits from public or can be non-deposit taking. In that case it has to raise debt through funding from Banks or FIs otherwise through debenture route.
* Investment Company: These companies raise funds from the clients in order to invest in securities on behalf of clients who also share profits or losses generated out of investments.
* Loan Company: The main business of these companies is to finance working capital requirement of the companies, not the asset financing. A NBFC could be considered as Loan Company provided 50% of its assets are in working capital financing, generating 50% of the income from the funds lent for the purpose.
* Infrastructure Finance Company: These companies provide loans for development of infrastructure in the areas of transport, energy, water & sanitation, communication, social and commercial space. The net worth of such companies should be at least Rs 300 crores, with stipulation of deploying 75% of total assets in the aforementioned sectors. As these companies raise funds from the markets, Banks, FIs. they are required to obtain minimum credit rating of A from rating agencies namely CRISIL, CARE, ICRA, FITCH or equivalent by any other credit rating agency.
* Core Investment Company: These companies generally carry on business of acquisition of securities and shares. Their 90% holding would be in the form of equity shares, preference shares and bonds. These companies are required to invest 60% in the equity of group companies.
* Micro Finance Company: These companies offer financial services to the poor in the rural and semi-urban areas, in the form of credit or savings. These companies generally help poor in economic activities, enhancing savings and providing self-employment. The minimum net capital of these companies should be Rs 5 crores, and these companies could provide loans up to Rs 50,000/- to individual falling under low income group.
* Infrastructure Debt Fund: These funds are nothing but an investment pool where core holdings are fixed income investments. In this sector, requirement is huge, long gestation period and long term in nature. If IDF is set up as a Trust it would become MF, regulated by SEBI, and if set up as a company it would fall under NBFC definition, regulated by RBI.
* Factoring: This business is acquisition of receivables by way of its assignment or financing, by creating security interest over receivables. The book-debt financing by Banks is not covered under factoring business. The net owned funds should be at least Rs 5 crores and its financial assets in Factoring business should be at least 75% of total assets and its income derived from factoring business should not be less than 75% of its gross income.
* Residuary Non-banking Company: As the title suggests, these companies are not into financing business, but into accepting deposits only.
* Housing Finance Company: These companies have to state Housing Finance as main clause in Memorandum of Association. These companies complement commercial banks in lending to individual or firms.
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