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Non-banking financial companies (NBFCs) form an integral part of the Indian financial system. The
history of the NBFC Industry in India is a story of under-regulation followed by over-regulation. Policy
makers have swung from one extreme position to another in their attempt to set controls and then
restrain them so that they do not curb the growth of the industry. This report covers the industry.
Non Banking Financial Companies or NBFC in India are registered companies conducting business
activities similar to regular banks. Their banking operations include making loans and advances available
to consumers and businesses, acquisition of marketable securities, leasing of hard assets like
automobiles, hire-purchase and insurance business.
Though they are similar to banks, they differ in a couple of ways. NBFC’s cannot accept demand deposits
(deposits that can be withdrawn at immediate notice), they cannot issue checks to customers and the
deposits with them are not insured by the DICGC (the India equivalent of FDIC in the US system). Either
the RBI (Reserve Bank of India) or the SEBI (Securities and Exchange Board of India) or both regulate
NBFC’s.
Though the NBFC’s have been around for a long time, they have recently gained popularity amongst
institutional investors, since they facilitate access to credit for semi-rural and rural India where the reach
of traditional banks has traditionally been poor.
https://in.answers.yahoo.com/question/index?qid=20100905054651AA2QvBX

Non-bank financial companies (NBFCs) are financial institutions that provide banking services
without meeting the legal definition of a bank, i.e. one that does not hold a banking license.
These institutions typically are restricted from taking deposits from the public depending on the
jurisdiction. Nonetheless, operations of these institutions are often still covered under a countries
banking regulations.[1]
The specific banking products that can be offered by NBFCs depends on the jurisdiction, and
may include services such as loans and credit facilities, savings products, investments and money
transfer services. In some jurisdictions, such as New Zealand, any company can engage in
banking business, except they are not allowed to use the word bank in their name. A company
can only call itself a bank if is a registered as such with the nation's central bank.
http://en.wikipedia.org/wiki/Non-banking_financial_company

Services provided
NBFCs offer most sorts of banking services, such as loans and credit facilities, private education
funding, retirement planning, trading in money markets, underwriting stocks and shares,
TFCs(Term Finance Certificate) and other obligations. These institutions also provide wealth
management such as managing portfolios of stocks and shares, discounting services e.g.
discounting of instruments and advice on merger and acquisition activities. The number of nonbanking financial companies has expanded greatly in the last several years as venture capital
companies, retail and industrial companies have entered the lending business. Non-bank

institutions also frequently support investments in property and prepare feasibility, market or
industry studies for companies.
However they are typically not allowed to take deposits from the general public and have to find
other means of funding their operations such as issuing debt instruments.

Regulation
For European NCs the Payment Services Directive (PSD) is a regulatory initiative from the
European Commission to regulate payment services and payment service providers throughout
the European Union (EU) and Eurofff Economic Area (EEA). The PSD describes which type of
organisations can provide payment services in Europe (credit institutions (i.e. banks) and certain
authorities (e.g. Central Banks, government bodies), Electronic Money Institutions (EMI), and
also creates the new category of Payment Institutions). Organisations that are not credit
institutions or EMI, can apply for an authorisation as Payment Institution in any EU country of
their URL choice (where they are established) and then passport their payment services into
other Member States across the EU.

Classification
This section requires expansion. (May 2012)

Based on their Liability Structure, NBFCs have been divided into two categories. 1. Category
„A‟ companies (NBFCs accepting public deposits or NBFCs-D), and 2. Category „B‟ companies
(NBFCs not raising public deposits or NBFCs-ND).
NBFCs-D are subject to requirements of Capital adequacy, Liquid assets maintenance, Exposure
norms (including restrictions on exposure to investments in land, building and unquoted shares),
ALM discipline and reporting requirements; In contrast, until 2006 NBFCs-ND were subject to
minimal regulation. Since April 1, 2007, non-deposit taking NBFCs with assets of `1 billion and
above are being classified as Systemically Important Non-Deposit taking NBFCs (NBFCs-NDSI), and prudential regulations, such as capital adequacy requirements and exposure norms along
with reporting requirements, have been made applicable to them. The asset liability management
(ALM) reporting and disclosure norms have also been made applicable to them at different
points of time.
Depending upon their nature of activities, non- banking finance companies can be classified into
the following categories:
1.
2.
3.
4.
5.

Development finance institutions
Leasing companies
Investment companies
Modaraba companies
House finance companies

6. Venture capital companies
7. Discount & guarantee houses
8. Corporate development companies

See also




Alternative financial services
Non-bank financial institution
Shadow banking system

References
1. http://www.investopedia.com/terms/n/nbfcs.asp

External links



RBI (India) FAQ's for NBFC
List of deposit taking NBFCs- India

n.wikipedia.org/wiki/Non-banking_financial_company
Non-Banking Financial Companies (NBFCs)
Non-banking financial companies (NBFCs) are fast emerging as an important segment of Indian financial
system. It is an heterogeneous group of institutions (other than commercial and co-operative banks)
performing financial intermediation in a variety of ways, like accepting deposits, making loans and
advances, leasing, hire purchase, etc. They raise funds from the public, directly or indirectly, and lend
them to ultimate spenders. They advance loans to the various wholesale and retail traders, small-scale
industries and self-employed persons. Thus, they have broadened and diversified the range of products
and services offered by a financial sector. Gradually, they are being recognised as complementary to the
banking sector due to their customer-oriented services; simplified procedures; attractive rates of return
on deposits; flexibility and timeliness in meeting the credit needs of specified sectors; etc.

The working and operations of NBFCs are regulated by the Reserve Bank of India (RBI) within
the framework of the Reserve Bank of India Act, 1934 (Chapter III B) and the directions issued
by it under the Act. As per the RBI Act, a 'non-banking financial company' is defined as:- (i) a
financial institution which is a company; (ii) a non banking institution which is a company and
which has as its principal business the receiving of deposits, under any scheme or arrangement or
in any other manner, or lending in any manner; (iii) such other non-banking institution or class of

such institutions, as the bank may, with the previous approval of the Central Government and by
notification in the Official Gazette, specify.
Under the Act, it is mandatory for a NBFC to get itself registered with the RBI as a deposit
taking company. This registration authorises it to conduct its business as an NBFC. For the
registration with the RBI, a company incorporated under the Companies Act, 1956 and desirous
of commencing business of non-banking financial institution, should have a minimum net owned
fund (NOF) of Rs 25 lakh (raised to Rs 200 lakh w.e.f April 21, 1999). The term 'NOF' means,
owned funds (paid-up capital and free reserves,minus accumulated losses, deferred revenue
expenditure and other intangible assets) less, (i) investments in shares of subsidiaries/companies
in the same group/ all other NBFCs; and (ii) the book value of debentures/bonds/ outstanding
loans and advances, including hire-purchase and lease finance made to, and deposits with,
subsidiaries/ companies in the same group, in excess of 10% of the owned funds.
The registration process involves submission of an application by the company in the prescribed
format along with the necessary documents for RBI's consideration. If the bank is satisfied that
the conditions enumerated in the RBI Act, 1934 are fulfilled, it issues a 'Certificate of
Registration' to the company. Only those NBFCs holding a valid Certificate of Registration can
accept/hold public deposits. The NBFCs accepting public deposits should comply with the NonBanking Financial Companies Acceptance of Public Deposits ( Reserve Bank) Directions, 1998,
as issued by the bank. Some of the important regulations relating to acceptance of deposits by the
NBFCs are:

They are allowed to accept/renew public deposits for a minimum period of 12 months and
maximum period of 60 months.



They cannot accept deposits repayable on demand.



They cannot offer interest rates higher than the ceiling rate prescribed by RBI from time to time.



They cannot offer gifts/incentives or any other additional benefit to the depositors.



They should have minimum investment grade credit rating.



Their deposits are not insured.



The repayment of deposits by NBFCs is not guaranteed by RBI.

The types of NBFCs registered with the RBI are:

Equipment leasing company:- is any financial institution whose principal business is that of
leasing equipments or financing of such an activity.



Hire-purchase company:- is any financial intermediary whose principal business relates to hire
purchase transactions or financing of such transactions.



Loan company:- means any financial institution whose principal business is that of providing
finance, whether by making loans or advances or otherwise for any activity other than its own
(excluding any equipment leasing or hire-purchase finance activity).



Investment company:- is any financial intermediary whose principal business is that of buying
and selling of securities.

Now, these NBFCs have been reclassified into three categories:

Asset Finance Company (AFC)



Investment Company (IC) and



Loan Company (LC). Under this classification, 'AFC' is defined as a financial institution whose
principal business is that of financing the physical assets which support various
productive/economic activities in the country.

https://www.google.co.in/search?newwindow=1&q=history+of+NBFC+in+india+&oq=history+of+NBFC+i
n+india+&gs_l=serp.12...204773.205237.0.206969.3.3.0.0.0.0.0.0..0.0....0...1c.1.49.serp..3.0.0.nd9vNOji
7kM

Financial Institutions
Financial sector plays an indispensable role in the overall development of a country. The most important
constituent of this sector is the financial institutions, which act as a conduit for the transfer of resources
from net savers to net borrowers, that is, from those who spend less than their earnings to those who
spend more than their earnings. The financial institutions have traditionally been the major source of
long-term funds for the economy. These institutions provide a variety of financial products and services
to fulfil the varied needs of the commercial sector. Besides, they provide assistance to new enterprises,
small and medium firms as well as to the industries established in backward areas. Thus, they have
helped in reducing regional disparities by inducing widespread industrial development.

The Government of India, in order to provide adequate supply of credit to various sectors of the
economy, has evolved a well developed structure of financial institutions in the country. These
financial institutions can be broadly categorised into All India institutions and State level
institutions, depending upon the geographical coverage of their operations. At the national level,
they provide long and medium term loans at reasonable rates of interest. They subscribe to the
debenture issues of companies, underwrite public issue of shares, guarantee loans and deferred
payments, etc. Though, the State level institutions are mainly concerned with the development of
medium and small scale enterprises, but they provide the same type of financial assistance as the
national level institutions.
National Level Institutions

A wide variety of financial institutions have been set up at the national level. They cater to the
diverse financial requirements of the entrepreneurs. They include all India development banks
like IDBI, SIDBI, IFCI Ltd, IIBI; specialised financial institutions like IVCF, ICICI Venture
Funds Ltd, TFCI ; investment institutions like LIC, GIC, UTI; etc.
1. All-India Development Banks (AIDBs):- Includes those development banks which provide
institutional credit to not only large and medium enterprises but also help in promotion and
development of small scale industrial units.


Industrial Development Bank of India (IDBI):- was established in July 1964 as an apex
financial institution for industrial development in the country. It caters to the diversified
needs of medium and large scale industries in the form of financial assistance, both
direct and indirect. Direct assistance is provided by way of project loans, underwriting of
and direct subscription to industrial securities, soft loans, technical refund loans, etc.
While, indirect assistance is in the form of refinance facilities to industrial concerns.



Industrial Finance Corporation of India Ltd (IFCI Ltd):- was the first development finance
institution set up in 1948 under the IFCI Act in order to pioneer long-term institutional
credit to medium and large industries. It aims to provide financial assistance to industry

by way of rupee and foreign currency loans, underwrites/subscribes the issue of stocks,
shares, bonds and debentures of industrial concerns, etc. It has also diversified its
activities in the field of merchant banking, syndication of loans, formulation of
rehabilitation programmes, assignments relating to amalgamations and mergers, etc.



Small Industries Development Bank of India (SIDBI):- was set up by the Government of
India in April 1990, as a wholly owned subsidiary of IDBI. It is the principal financial
institution for promotion, financing and development of small scale industries in the
economy. It aims to empower the Micro, Small and Medium Enterprises (MSME) sector
with a view to contributing to the process of economic growth, employment generation
and balanced regional development.



Industrial Investment Bank of India Ltd (IIBI):- was set up in 1985 under the Industrial
reconstruction Bank of India Act, 1984, as the principal credit and reconstruction agency
for sick industrial units. It was converted into IIBI on March 17, 1997, as a full-fledged
development financial institution. It assists industry mainly in medium and large sector
through wide ranging products and services. Besides project finance, IIBI also provides
short duration non-project asset-backed financing in the form of underwriting/direct
subscription, deferred payment guarantees and working capital/other short-term loans
to companies to meet their fund requirements.

2. Specialised Financial Institutions (SFIs):- are the institutions which have been set up to serve
the increasing financial needs of commerce and trade in the area of venture capital, credit rating
and leasing, etc.


IFCI Venture Capital Funds Ltd (IVCF):- formerly known as Risk Capital & Technology
Finance Corporation Ltd (RCTC), is a subsidiary of IFCI Ltd. It was promoted with the
objective of broadening entrepreneurial base in the country by facilitating funding to
ventures involving innovative product/process/technology. Initially, it started providing
financial assistance by way of soft loans to promoters under its 'Risk Capital Scheme' .
Since 1988, it also started providing finance under 'Technology Finance and
Development Scheme' to projects for commercialisation of indigenous technology for
new processes, products, market or services. Over the years, it has acquired great deal
of experience in investing in technology-oriented projects.



ICICI Venture Funds Ltd:- formerly known as Technology Development & Information
Company of India Limited (TDICI), was founded in 1988 as a joint venture with the Unit
Trust of India. Subsequently, it became a fully owned subsidiary of ICICI. It is a
technology venture finance company, set up to sanction project finance for new
technology ventures. The industrial units assisted by it are in the fields of computer,
chemicals/polymers, drugs, diagnostics and vaccines, biotechnology, environmental

engineering, etc.



Tourism Finance Corporation of India Ltd. (TFCI):- is a specialised financial institution set
up by the Government of India for promotion and growth of tourist industry in the
country. Apart from conventional tourism projects, it provides financial assistance for
non-conventional tourism projects like amusement parks, ropeways, car rental services,
ferries for inland water transport, etc.

3. Investment Institutions:- are the most popular form of financial intermediaries, which
particularly catering to the needs of small savers and investors. They deploy their assets largely
in marketable securities.


Life Insurance Corporation of India (LIC):- was established in 1956 as a wholly-owned
corporation of the Government of India. It was formed by the Life Insurance Corporation
Act,1956 , with the objective of spreading life insurance much more widely and in
particular to the rural area. It also extends assistance for development of infrastructure
facilities like housing, rural electrification, water supply, sewerage, etc. In addition, it
extends resource support to other financial institutions through subscription to their
shares and bonds, etc. The Life Insurance Corporation of India also transacts business
abroad and has offices in Fiji, Mauritius and United Kingdom . Besides the branch
operations, the Corporation has established overseas subsidiaries jointly with reputed
local partners in Bahrain, Nepal and Sri Lanka.



Unit Trust of India (UTI):- was set up as a body corporate under the UTI Act, 1963, with a
view to encourage savings and investment. It mobilises savings of small investors
through sale of units and channelises them into corporate investments mainly by way of
secondary capital market operations. Thus, its primary objective is to stimulate and pool
the savings of the middle and low income groups and enable them to share the benefits
of the rapidly growing industrialisation in the country. In December 2002, the UTI Act,
1963 was repealed with the passage of Unit Trust of India (Transfer of Undertaking and
Repeal) Act, 2002, paving the way for the bifurcation of UTI into 2 entities, UTI-I and
UTI-II with effect from 1st February 2003.



General Insurance Corporation of India (GIC) :- was formed in pursuance of the General
Insurance Business (Nationalisation) Act, 1972(GIBNA ), for the purpose of
superintending, controlling and carrying on the business of general insurance or non-life
insurance. Initially, GIC had four subsidiary branches, namely, National Insurance
Company Ltd , The New India Assurance Company Ltd , The Oriental Insurance Company
Ltd and United India Insurance Company Ltd . But these branches were delinked from
GIC in 2000 to form an association known as 'GIPSA' (General Insurance Public Sector

Association).

State Level Institutions
Several financial institutions have been set up at the State level which supplement the financial
assistance provided by the all India institutions. They act as a catalyst for promotion of
investment and industrial development in the respective States. They broadly consist of 'State
financial corporations' and 'State industrial development corporations'.


State Financial Corporations (SFCs) :- are the State-level financial institutions which play a
crucial role in the development of small and medium enterprises in the concerned States. They
provide financial assistance in the form of term loans, direct subscription to equity/debentures,
guarantees, discounting of bills of exchange and seed/ special capital, etc. SFCs have been set up
with the objective of catalysing higher investment, generating greater employment and
widening the ownership base of industries. They have also started providing assistance to newer
types of business activities like floriculture, tissue culture, poultry farming, commercial
complexes and services related to engineering, marketing, etc. There are 18 State Financial
Corporations (SFCs) in the country:-

1. Andhra Pradesh State Financial Corporation (APSFC)

2. Himachal Pradesh Financial Corporation (HPFC)

3. Madhya Pradesh Financial Corporation (MPFC)

4. North Eastern Development Finance Corporation (NEDFI)

5. Rajasthan Finance Corporation (RFC)

6. Tamil Nadu Industrial Investment Corporation Limited

7. Uttar Pradesh Financial Corporation (UPFC)

8. Delhi Financial Corporation (DFC)

9. Gujarat State Financial Corporation (GSFC)

10. The Economic Development Corporation of Goa ( EDC)

11. Haryana Financial Corporation ( HFC )

12. Jammu & Kashmir State Financial Corporation ( JKSFC)

13. Karnataka State Financial Corporation (KSFC)

14. Kerala Financial Corporation ( KFC )

15. Maharashtra State Financial Corporation (MSFC )

16. Odisha State Financial Corporation (OSFC)

17. Punjab Financial Corporation (PFC)

18. West Bengal Financial Corporation (WBFC)


State Industrial Development Corporations (SIDCs) :- have been established under the
Companies Act, 1956, as wholly-owned undertakings of State Governments. They have been set
up with the aim of promoting industrial development in the respective States and providing
financial assistance to small entrepreneurs. They are also involved in setting up of medium and
large industrial projects in the joint sector/assisted sector in collaboration with private
entrepreneurs or wholly-owned subsidiaries. They are undertaking a variety of promotional
activities such as preparation of feasibility reports; conducting industrial potential surveys;
entrepreneurship training and development programmes; as well as developing industrial
areas/estates. The State Industrial Development Corporations in the country are:1. Assam Industrial Development Corporation Ltd (AIDC)

2. Andaman & Nicobar Islands Integrated Development Corporation Ltd (ANIIDCO)

3. Andhra Pradesh Industrial Development Corporation Ltd (APIDC)

4. Bihar State Credit and Investment Corporation Ltd. (BICICO)

5. Chhattisgarh State Industrial Development Corporation Limited (CSIDC)

6. Goa Industrial Development Corporation

7. Gujarat Industrial Development Corporation (GIDC)

8. Haryana State Industrial & Infrastructure Development Corporation Ltd. (HSIIDC)

9. Himachal Pradesh State Industrial Development Corporation Ltd. (HPSIDC)

10. Jammu and Kashmir State Industrial Development Corporation Ltd.

11. Karnataka State Industrial Investment & Development Corporation Ltd. (KSIIDC)

12. Kerala State Industrial Development Corporation Ltd. (KSIDC)

13. Maharashtra Industrial Development Corporation (MIDC)

14. Manipur Industrial Development Corporation Ltd. (MANIDCO)

15. Nagaland Industrial Development Corporation Ltd. (NIDC)

16. Odisha Industrial Infrastructure Development Corporation

17. Omnibus Industrial Development Corporation (OIDC), Daman & Diu and Dadra & Nagar
Haveli.

18. Pudhucherry Industrial Promotion Development and Investment Corporation Ltd.
(PIPDIC)

19. Uttar Pradesh State Industrial Development Corporation

20. Punjab State Industrial Development Corporation Ltd. (PSIDC)

21. Rajasthan State Industrial Development & Investment Corporation Ltd. (RIICO)

22. Sikkim Industrial Development & Investment Corporation Ltd. (SIDICO)

23. Tamil Nadu Industrial Development Corporation Ltd. (TIDCO)

24. State Infrastructure & Industrial Development Corporation of Uttaranchal Ltd. (SIDCUL)

25. Tripura Industrial Development Corporation Ltd. (TIDC)

^ Top
http://business.gov.in/business_financing/financial_institutions.php

Banks are the most important institutions which are responsible in managing and securing the
wealth of the common man. The banking industry, whether public banks or private banks, are the
most trusted business entities, where people with all their trust deposit their hard earned money
for safety. However, there is another institution which has gradually made its presence felt in this
field- Non Banking Financial Company.

Non banking financial companies are primarily responsible for receiving deposits under any
scheme or arrangement or any other manner, or lending, similar to banks, but they don‟t have a
banking license . NBFC‟s focus on business related to loans and advances, acquisition of shares,
stock, bonds, debentures, securities issued by government or local authority or other securities
of like marketable nature, leasing, hire-purchase, insurance business, chit business. NBFC‟s are
financial intermediaries engaged in the business of accepting deposits delivering credit and play
an important role in channelizing the scarce financial resources to capital formation. They
supplement the role of the banking sector in meeting the increasing financial needs of the
corporate sector, delivering credit to the unorganized sector and to small local borrowers.
However, they do not include services related to agriculture activity, industrial activity, sale,
purchase or construction of immovable property. In India, despite being different from banks,
NBFC are bound by the Indian banking industry rules and regulations.

NBFC‟s have a striking similarity with the banks in terms of the services offered. However, there
is a major difference between the roles, responsibilities and functions between banks and non
banking financial companies. Some of the differences can be pointed out as below:

• A NBFC cannot accept demand deposits i.e. funds deposited at a depository institution that are
payable on demand immediately or within a very short period, which are similar to current
accounts or savings accounts.
• NBFC‟s cannot issue cheques to its customers as they are not a part of the transactions system.
• Deposit insurance facilities are also not available for NBFC depositors unlike in case of banks.

For an institution to become a NBFC, it is mandatory for it to be registered with the Central
Bank i.e. RBI in India, to carry out its operations. However, certain NBFC‟s i.e. venture capital

fund/merchant banking companies/stock broking companies registered with Sebi, insurance
company holding a valid certificate of registration issued by IRDA etc are exempted from being
registered under the RBI. The list of institutions which need to be registered under the RBI to
become NBFC‟s are:
• loan company
• investment company
• equipment leasing company
• hire-purchase company

The different types of NBFCs registered with RBI have been reclassified as
• Asset Finance Company (AFC)
• Investment Company (IC)
• Loan Company (LC)

NBFC‟s have seen a considerable business model shift because of the fluctuating environment
and market dynamics. NBFC‟s are constantly facing challenges like high cost of funds, slow
industrial growth, stiff competition with the banking sector, non performing assets etc.
However, NBFC‟s do play a critical role in participating in the development of an economy by
development in sectors like transport, employment generation, wealth creation, bank credit in
rural segments and to support financially weaker sections of the society. Emergency services like
financial assistance and guidance is also provided to the customers in the matters pertaining to
insurance.
The banking sector would always be the most important sector in the field of business because of
its credibility in supporting manufacturing, infrastructural development and even being the
backbone for the common man‟s money. But despite this, the roles of NBFC‟s are critical and
their presence in a country would only boost the economy in the right direction.

Introduction:
In the last 10-15 years, there have been many development in Non-Banking Financial Sector. In the light
of these, the Reserve Bank of India has recognized the need to introduce certain measures to curb the
exaggerated business activity in this sector. This has led to the new policy of Reserve Bank of India on

non-banking companies putting an end to the NBFCs honeymoon with the policy of liberalization in the
financial sector. So that present study focuses on various aspect of regulatory framework,
In India, four types of non-banking financial companies (NBFCs), viz., equipment leasing companies, hirepurchase companies, loan companies and investment companies are under the regulatory purview of
the Reserve Bank. With the increasing services sector activity in India, the NBFCs have been playing a
critical role in providing credit. NBFCs have extensive networks. The insertion of chapter III B in the
Reserve Bank of India Act, 1934 enabled the Reserve Bank to regulate the NBFCs statutorily since
February 1964. Since then, the Reserve Bank has initiated a series of measures to appropriately regulate
and supervise the NBFCs according to the need from time to time. In 1966, new directives were issued
to increase the regulatory powers of the Reserve Bank with regard to NBFCs.[1]
Meaning of NBFC:
A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 and is
engaged in the business of loans and advances, acquisition of shares/stock/bonds/
debentures/securities issued by Government or local authority or other securities of like marketable
nature, leasing, hire-purchase, insurance business, chit business but does not include any institution
whose principal business is that of agriculture activity, industrial activity, sale/purchase/construction of
immovable property. A non-banking institution which is a company and which has its principal business
of receiving deposits under any scheme or arrangement or any other manner, or lending in any manner
is also a non-banking financial company[2].
Definition of Non-Banking Financial Companies (NBFCs):
Section 45-I(b) of chapter 3rd of Reserve Bank of India Act 1934 defines Non-Banking Financial Company
as;
(a) a financial institution , which is a company
(b) a financial institution, which is accompany and which has as it principal business the receiving of
deposits under any scheme or arrangement or in any manner or lending in any manner.
(c) Such other non-banking institution or class of such institution, as the bank may with the previous
approval of central government and any notification in the official gazette specific.
NBFCs accepting of public deposit (Reserve Bank) direction 1998 define non banking financial institution
as only the banking institution which is a loan company or an investment company or a hire purchase
finance company or an equipment leasing company or a mutual benefit finance company.
Classification of NBFC’s
Different NBFCs are providing different services. The Reserve Bank of India has classified them into the
following categories:1. Share Trading and Investment Holding
2. Loan Finance

1[1] M.R Shollapur,” The Indian Journal OF Commerce” October- December 2005, p 101

2[2] P.C. Jain & S.S Verma “Money and Financial System” Sahitya Bhawan Publication (2006),
P 127.

3. Hire Purchase finance
4. Leasing Finance
5. Diversified
6. Miscellaneous
Non-banking financial companies (NBFCs) in India has recorded marked growth in recent years. After
their existence, they are useful and fruitful for the evolution of a vibrant, competitive and dynamic
financial system in Indian money market. There are different categories of such companies like:1. Loan companies
2. Investment companies
3. Hire Purchase Finance companies
4. Equipment Leasing companies
5. Mutual Benefit Finance companies
6. Miscellaneous Non-Banking companies
7. Miscellaneous Finance companies
8. Residuary Non-Banking companies
9. Housing Finance companies
Keeping in mind, the importance and essentiality of finance companies, the Banking Laws
(Miscellaneous Provisions) Act 1963 was introduced to regulate the NBFCs. Several committees were
appointed from time to time to enable the Regulatory Authorities to frame suitable policy measures.
These committees helped to regulate and conduct an in-depth study and to make suitable
recommendations for their healthy growth within a given regulatory framework. The suggestions /
recommendations made in the context of the contemporary financial scenario by these committees
established the basis for the formulation of policy measures by the Regulatory Authorities / Reserve
Bank of India. The committees which deserve specific mention in this regard are: Bhabatosh Datta Study
Group (1971), James Raj Study Group (1975), Chakravarty Committee (1985), Vaghul Committee (1987),
Narsimhan Committee (1991) and Shah Committee (1992). The Shah Committee as a follow up to the
Narsimhan Committee, was the first to suggest a comprehensive regulatory framework for NBFCs. While
endorsing in principle the Shah Committee framework of regulation of NBFCs, the Reserve Bank of India
has implemented a number oof its recommendations and incorporated them in the Reserve Bank of
India directions, which regulate and supervise the working and operation of such companies. The
Khanna Group (1996) suggested a supervisory framework for NBFCs. In pursuance of its
recommendations, the Reserve Bank of India Act was amended in January 1997.
It is clear that largest number of companies are engaged in share trading and investment holding. They
also undertake the work of merchant banking, share depository, registrar of share transfer and other
allied business. Some of them are very high like Kotak Mahindra and they undertake all conceivable
work of financial services including under-writing, consultancy on acquisition and merger, and arranging
loans.
The second group of companies are engaged in the business of loan finance. Their main function is to
give loans to buyers of equipment for factories, lease finance for personal durables like automobiles, ,
air conditioners, refrigerators, etc. They also provide loan finance for houses. Gradually, competition is
increasing between them. Banks and development banks are also undertaking similar activities; some of
loan finance companies are also providing loans for industry and trade for short and medium term

needs. The borrowings generally go to them for assistance when they do not get assistance from
organized sector because of credit worthiness or viability of the project. NBFCs are more flexible in both
these two regards but their interest rate is higher than banks.
According to the Reserve Bank of India study 11.2% companies are engaged in hire purchase business.
The most important part of hire purchase is financing of trucks and other automobiles. Many
automobile manufacturers have their own hire purchase companies or have tie up with one or more
other NBFCs. With the increasing number of automobiles their number is increasing and some
customers are fleeced by them by levying hidden charges like processing fee and fixing monthly
installments on total amount for total period without adjusting for monthly payments. Thus interest
works out much higher than told orally. When one is not able to pay any installment, vehicle or other
item sold on hire purchase is confiscated and buyer looses the entire money paid till then because in
hire purchases ownership does not transfer till last installment has been paid.
Lease Finance is another important activity in which ownership passes to the buyers immediately after
the leasing company pays seller of the price. The financier does not prefer this route because of greater
risk involved and only 6.5% of the companies are engaged in this business.
There are 5.8% of the companies who are undertaking various types of activities and are called
diversified. They undertake more than one activity such as share trading, investment holding, loan
finance, hire purchase and lease finance. They are willing to undertake any business, which they feel, is
viable and profitable.
The rest of 18.9% are miscellaneous companies engaged in different types of financial activities but each
one of them specializes in one or a few activities which they finance including giving loans on mortgage
of any asset like gold, ornaments, houses, machinery and equipment. Some of them stock goods when
they are cheap at the time of arrival of the crops and sell them when prices rise. They trade in difference
on their own account. They are willing to fill the gap between demand for funds and their supplies from
organized financial institutions.
The NBFCs are trading largely on the money of others. The NBFCs till a decade back had no regulation
about their investment structure and even now they are free to finance any activity. Thus the Reserve
Bank of India monetary policy is not applicable on them. Therefore, the Reserve Bank of India is not able
to control them and NBFCs are getting benefit of it. NBFCs are willing to accept unaccounted money as
deposits and loans which encourages parallel economy and helps in evasion of income tax, sales tax and
other taxes. Some NBFCs are having competition with commercial banks. They are willing to finance up
to 100% of asset which is not possible for banks. When bank finance is not available NBFCs provide the
credit.
The Reserve Bank of India interest rate policy is not applicable to them except a ceiling fixed by the
Reserve Bank of India on their deposits[3].
The Reserve Bank of India Control on NBFCs

3[3] Sanjiv Shankaran(August),Business Line, Published by THE HINDU,/ I:\NBFCs Banking
on new areas.htm

In view of various evils of NBFCs and their disadvantages, the Reserve Bank of India started regulating
them in 1963 under the provisions of Chapter III B of the RBI Act and the directions issued therein. In the
beginning these regulations were confined solely to deposits acceptance activities and did not cover
their functional diversity and expanding intermediation.
The Reserve Bank of India felt that this regulation was not adequate to control the working of NBFCs.
Hence in 1992 it appointed the Working Group on Financial Companies under the chairmanship of Mr.
Shah which submitted its report in September 1992 and suggested better control on NBFCs so that there
may be better and more effective control of the Reserve Bank of India and their activities may be
aligned with the financial system.
In pursuance of the recommendations of the Working Group on NBFCs in 1992 (Chairman: A.C. Shah),
the Reserve Bank initiated a series of measures including redefining the deposit acceptance scheme of
registration of NBFCs based on the net owned fund of Rs.50 lakh and above. The Reserve Bank also
started regulating the asset side of the NBFCs. In 1994, NBFCs were subjected to prudential norms
relating to income recognition, asset classification, provisioning and capital adequacy. Accordingly,
registered NBFCs were required to achieve a minimum capital adequacy norm of 6 per cent in March 31,
1995. The CRAR norms for NBFCs have been progressively increased and the norm prescribed at present
is 12 per cent
REGULATION OF NBFCs IN APRIL 1993
Based on the recommendations, system of regulation was introduced in April 1993 for those NBFCs
whose Net Owned Funds were Rs. 50 lakhs and above. Prudential norms pertaining to income
recognition, asset classification were prescribed in June 1994.
In April 1995, the Reserve Bank of India constituted an Expert Group for designing a supervisory
framework. This Group was known as Khanna Committee. On the basis of the recommendations of
Khanna Committee the Reserve Bank of India Act was amended in January 1997 to vest more powers to
supervise and control the working of NBFCs.
In 1966, two new directives, viz., the Non-Banking Financial Companies (Reserve Bank) Directions, 1966
and Non-Banking Non-Financial Companies (Reserve Bank) Directions, 1966 were issued. To remove the
hardship faced by industrial undertakings in complying with the provisions of the directives on time, the
Reserve Bank made certain modifications in the Directives in 1967.
Steps taken in 1997 for betterment of NBFCs
1 Registration was made compulsory for all NBFCs with minimum net owned funds of Rs. 25 lakhs as
against Rs. 50 lakhs in 1993.
2 Maintenance of liquid assets by NBFCs as a percentage of their deposits in unencumbered approved
securities (government guaranteed bonds) was made mandatory. The limits were to be decided by the
Reserve Bank of India from time to time.
3 Creation of a reserve fund and compulsory transfer of at least 20% of the net profits to above said
fund was made compulsory.
4 The Company Law Board was authorized to direct defaulting NBFCs to repay deposits.
5 The Reserve Bank of India was vested with following powers:i. Issue directions to NBFCs regarding compliance with the prudential norms.
ii. Issue directions to NBFCs and their auditors on matters relating to balance sheet and undertake pecial
audit as also to impose penalty on every auditor.

iii. Prohibit NBFCs from accepting deposits for violation of the provisions of the RBI Act and directions
given by the Reserve Bank of India.
iv. Reserve Bank of India was authorized to file winding up petition against NBFCs for violation of the
provisions of the RBI Act or directions issued by the Reserve Bank of India
v. Reserve Bank of India was also authorized to impose penalty directly on NBFCs for non-compliance
with the provisions of the RBI Act.
New Regulatory Framework for NBFCs
Based on above powers and experience gained about the working of NBFCs since 1993, the Reserve
Bank of India announced new set of regulatory measures in January 1998 which is the basis of control
and supervision.
NBFCs have been classified into three categories for purposes of regulations :(a) Those accepting public deposits.
(b) Those which do not accept public deposits.
(c) Core investment companies which hold at least 90% of their assets as investment in the securities of
their group / holding / subsidiary company.
The rules were more stringent for NBFCs who accept public deposits because the Reserve Bank of India
wants to safeguard the interest of deposits. Hence, NBFCs accepting public deposits are subject to the
entire regulations, those not accepting public deposits are regulated in a limited manner. Now the
regularity attention has been focused primarily on NBFCs accepting public deposits. However, the public
deposits have limited application. Borrowings by way of interoperate deposits, issue of secured
debentures / bonds, deposits from the shareholders by a private limited company and deposits from
directors by both public as well as private limited companies have been excluded from the purview of
public deposits. The Reserve Bank of India regulations on quantum, rate of interest, period of deposits,
etc. are applicable only with respect to public deposits with the exception of above.
The overall ceiling on borrowings by NBFCs has been reviewed and they have been sought to be decided
on the basis of capital adequacy requirements. The quantum of public deposits that can be raised by
NBFCs has been directly linked to the level of credit rating. An NBFCs intending to accept public deposits
must have minimum prescribed credit rating from any one of the approved credit rating agencies. In
other words, before issuing an advertisement for acceptance of deposits rating is compulsory.
Further small NBFCs whose net owned funds are less than Rs. 25 lakhs have been prohibited from
accepting deposits from the public. In order to streamline the working of NBFCs which held public
deposits in excess of their new entitlement have been allowed a period of three years to reduce /
regularize their excess deposits.
The NBFCs are required that at least one-third of excess should be reduced every year commencing from
December 1998 and to regularize entire excess by December 31, 2000. NBFCs having investment grade
credit rating can accept fresh deposits and renew such maturing deposits, while NBFCs who do not have
minimum credit rating or are not rated can only renew maturing public deposits. It is also expected that
during the three years period, NBFCs could obtain / improve their credit rating, improve their net owned
funds, substitute public deposits by other forms of debt and arrange for alternative sources of funds.
Thus, the Reserve Bank of India has given ample opportunity for adjustment so that working may not be
affected abruptly.
NBFCs were debarred from offering an interest rate exceeding 16% per annum and a brokerage fee over

2% on public deposits; with the overall decline in interest rates, the Reserve Bank of India has reduced
these rates from time to time so that they may be in alignment with other deposit rates.
For the first time prudential norms were fixed in 1998 for mandatory compliance under the statutory
powers vested with the Reserve Bank of India. The companies which accept public deposits are required
to comply with all the norms pertaining for bad and doubtful debts, capital adequacy, credit /
investment concentration norms, etc. To improve the liquidity of NBFCs, the percentage of liquid assets
required to be maintained by them has been enhanced to 12.5% and further to 15%.
As a move towards greater disclosure and transparency, NBFCs accepting public deposits have been
asked to furnish certain essential information regarding the financial activities with regard to their
application for deposits and advertisement for soliciting deposits. Depositors have been cautioned not
to be lured by interest rates alone and be careful to understand the financial position of the concerned
company.
Having regard to the risk profile of the assets of NBFCs, capital adequacy has been enhanced from 8% to
10%. NBFCs other than the core investment companies not accepting public deposits have been
exempted from the regulations on interest rates, period, ceiling on quantum of borrowings. However,
prudential norms which have bearing on the true and fair status of the financial health of these
companies as reflected in their balance sheets, have been made applicable to these companies, except
those relating to capital adequacy and credit concentration norms. The responsibilities of ensuring of
these regulations have been entrusted to the statutory auditors of these companies and the Reserve
Bank of India has issued directions to the statutory auditors for these purposes.
The statutory auditors of NBFCs are required to report to the Reserve Bank of India any irregularity or
violation of the Reserve Bank of India regulations on acceptance of deposits and prudential norms.
Merchant banking companies have been exempted from the provisions of the RBI Act 1934 relating to
compulsory registration and all provisions relating to deposit acceptance and prudential norms[4].
Major Recommendations of the Task Force on NBFCs
The Task Force on Non-banking Finance Companies (NBFCs) submitted its report on October 28, 1998.
The major recommendations are as under:· The rising number of defaulting NBFCs and the need for a quick redressal system call for change in the
existing legislative and regulatory framework for NBFCs.
· Extension of the period for attaining minimum Net Owned Funds (NOF) beyond three years (January
2000) should be made conditional on adequate steps having been taken by the concerned NBFCs. Also,
the minimum prescribed NOF of Rs. 25 lakh be considered for upward revision.
· The Reserve Bank of India should draw up a time bound programme for disposal of applications for
registration of NBFCs and keep States informed of registration granted/rejected in respect of NBFCs in
the respective States.
· Higher CRAR of 15 per cent for NBFCs seeking public deposits without credit rating be prescribed by
RBI, as against existing 12 per cent for rated NBFCs.
· Ceilings for exposures to real estate sector and investment in capital market, especially unquoted

4[4] Gupta, S.K., Aggrawal, N. & Gupta, N. “Indian Banking System”Kalyani Publishers, p.
17.23

shares, be prescribed by the Reserve Bank of India.
· The Reserve Bank of India may stipulate 25 per cent of reserves of NBFCs to be invested in marketable
securities in addition to SLR securities already held by them.
· The following ceilings may be prescribed for public deposits in respect of different categories of NBFCs.
Nature and Extent of Supervision of NBFCs:
The nature and extent of supervision have been based on the recommendations of Khanna Committee.
Recommendations and are based on three criteria, viz., the size of NBFC; the type of activity performed
and acceptance or otherwise of public deposits. It has been further stated that the main thrust of
supervision of NBFCs will be through an offsite surveillance mechanism.
The Reserve Bank of India has worked out a comprehensive inspection arrangement and has devised
special formats for off site reporting / monitoring. The formats of the annual returns have been revised
to seek more details relating to core assets, income of the companies. It has also been made mandatory
that the auditors of the NBFC should certify these returns.
On-site inspections of NBFCs with public deposits of Rs. 50 crore and above is sought to be carried out
annually and other NBFCs with deposits of less than Rs. 50 crore each are inspected by rotation. The
inspection is on the capital, adequacy, asset, quality, management, earnings, liquidity and systems
methodology.
Progress of NBFCs after 1998 Reforms:
After Reserve Bank of India implemented its regulations on NBFCs as discussed above there has been
clear definition of public deposits and there has been wider disclosure by NBFCs. The Reserve Bank of
India from time to time has taken more measures to safeguard the interest of depositors. It has been
insisted time and again that the balance sheet should depict true and fair picture of the company for
which company statutory auditors have been made responsible. Restrictions have been placed on
investments in real estates. In order to ensure that liquid assets are maintained against public deposit’s
NBFCs are required to lodge them with one of the scheduled bank or Stock Holding Corporation of India
Limited so that such securities are not withdrawn except for repayment to the deposits. Further, the
residuary NBFCs should invest at least 80% of deposit liability in specialized securities as per investment
pattern prescribed by the Reserve Bank of India in lieu of brokerage of NOF to total deposits.
There has also been certain relaxations in the working of NBFCs. They have been permitted to set up
joint venture companies for insurance business. They have also been allowed to convert them into
commercial banks if they meet the guidelines of the Reserve Bank of India. NBFCs with net owned funds
of Rs. 2 crore or more have been permitted to undertake insurance business as an agent of insurance
companies.
As regard the quantum of public deposit , the following norms shall be adopted.
Reclassification of NBFCs
Until December 6, 2006, NBFCs were classified as equipment leasing, hire-purchase, investment
companies and loan companies. Pursuant to the announcement made in the Mid-Term Review of
Annual Policy Statement for the year 2006-07 to re-group the companies engaged in financing
real/physical assets supporting economic activity such as automobiles, general purpose industrial
machinery and the like as asset financing companies, all NBFCs were advised on December 6, 2006 that
the re-classification of the categories of NBFCs would be as asset finance companies (AFC), investment

companies and loan companies.
AFC is defined as any company which is a financial institution carrying on as its principal business of
financing the physical assets supporting productive/economic activity such as automobiles, tractors,
generator sets, earth moving and material handling equipments, moving on own power and general
purpose industrial machines. Principal business for this purpose is defined as aggregate of financing
real/physical assets supporting economic activity and income arising thereform not less than 60 per cent
of the total assets and total income, respectively.
Since the classification for the purpose of income recognition, asset classification and provisioning
norms is based on asset specification, the extant prudential norms will continue as hitherto. The
companies satisfying the above conditions have been advised to approach the Regional Office of the
Reserve Bank in the jurisdiction in which their Registered Office is located, along with the original
certificate of registration (CoR) issued by the Reserve Bank to recognise their classification as asset
finance companies. Their request must be supported by their Statutory Auditor’s certificate indicating
the asset/income pattern of the company as on March 31, 2006. The change in classification would be
incorporated in the certificate of registration issued by the Reserve Bank as NBFC-Asset Finance
Company (NBFCD-AFC), if accepting deposits and NBFC-ND-AFC, if not accepting deposits.
New NBFC policy: An Evaluation:
Non-Banking finance companies are those concerns rendring financial services similar to commercial
banks and financial institutions but do not qualify to be branded as banks. Hence there name goes as
NBFCs. They accept as deposits, lend lease, operate mutual fund, and do a lot of similar functions. They
are an integral part of Indian financial system. Most NBFC are regulated by the Reserve Bank Of India .
NBFcs in India have been operating for a quite a long time. They in number they have grown in a
comparatively loose regulatory framework. Perhaps the growth have been due to absence of shackles.
Taking advantage from the loose framework , some NBFcs have also cheated by closing their ventures.
REGUALTORY FRAMEWORK:
The salient features of the new regulatory framework are as under:
· For the purpose the new regulatory framework , NBFC have been divided into three broad categories
viz, those accepting public deposits, not accepting public deposits and NBFCs not accepting public
deposits and have acquired securiries in its group companies of not less than 90%of their total assets.
· Prohibition from accepting deposit for NBFCs has net owed funds of less than Rs.25 lakhs. For the rest
ceiling on the quantum of public deposits have been linked to their credit rating.
· NBFCs with AAA ratig can raise three their net owned fund (NOF) through deposits if they are
equipment leasing or hire purchase (HP) companies and twice their (NOF).
· A 16% ceiling has been fixed for intrest om deposits.
· Brokerage will be 2% for all categiries of deposits.
· NBFCs that accept public deposits will have tyo file annual statutory returns and financial statement
with the RBI.
New Policy Directive- Impact on NBFCs:
The policy initiatives are in continuation initiatives, which were intesidied after the CRB scam. Before
analyzing the change it would be imntresting to look back on one important fact. Siunce one year or soa difficult period for NBFCs marked by adverse market conditions- the mainsteam NBFC industry have
alwayswelcomed prudentregulation and has even suggested necessary and development mesrure to the

RBI.
Comments Related to NBFCs:
The RBI Act 1997 and the regulations of April 1998 are comprehensive regulatory measures but it is
difficult to gauge the success of these measures because non-submission of periodic returns to Reserve
Bank of India is a common feature. To overcome this problem Reserve Bank of India has decided to
impose penalty besides considering cancellation of registration of NBFCs having deposits of Rs. 50 crore
and above. Gradually, the limit of Rs. 50 crore will be reduced as per Reserve Bank of India
announcement. Further, to tighten control, the Reserve Bank of India announced that the past period of
30 days for identification of NPAs would be done away for NBFCs. Reserve Bank of India has already
announced guidelines for identification of loss assets on an objective basis so that NPAs are properly
classified.
It seems that the Reserve Bank of India has taken all the steps but it has no machinery to verify whether
all the companies who are doing NBFC business has applied to it and whether those whose cases have
been rejected have ceased to operate or not. It is learnt that still many companies whose applications
have been rejected are carrying their own business. In order to ensure that rejected applicants do not
carry on the business it is being proposed to involve the state government.
Further, the success depends upon the fact that cases of default should decline but there is no authentic
data on this aspect, but it is also a fact that NBFCs are working in a more disciplined manner and in
future depositors should feel more secure and the Reserve Bank of India is doing its best to control and
regulate NBFCs.
Strengthening of the Supervision of NBFCs:
In the wake of failure of some NBFCs and loss of depositors’ money, the supervision of NBFCs assumed
critical importance. In the backdrop of the recommendations of the Khanna Committee (1999), a
comprehensive supervisory model has been devised for effective supervision of the NBFCs depending
upon the size, type of activity and acceptance or otherwise of public deposits. For this purpose, a fourpronged mechanism comprising on-site inspection on the CAMELS pattern, off-site monitoring through
periodic control returns using state-of-the-art information technology; an effective market intelligence
network; and a system of submission of exception reports by statutory auditors of NBFCs were
instituted in order to buttress the regulatory and supervisory framework for NBFCs. The system of onsite examination is structured on the basis of CAMELS approach and the same is akin to the supervisory
model adopted for the banking system. The inspection policy of the NBFCs has recently been revised to
regulate them effectively. In order to bring the functioning of the NBFCs in line with international best
practices, the Reserve Bank initiated a consultative process with the NBFCs with regard to their plan of
action for voluntarily phasing out of their acceptance of public deposits. Recently, the Reserve Bank has
laid down a road map for Residuary Non-Banking Companies (RNBCs) with a view to ensure that the
transition process of these institutions complies with the Reserve Bank’s directions.
[1] http://www.rbi.org.in/scripts/PublicationReportDetails.aspx?ID=456

[2] http://www.rbi.org.in/scripts/FAQView.aspx?Id=58
*3+ Srivastava, R.M. & Nigam, D. (2004) “Management of Indian Financial Institution”, Himalaya
Publishing House, p. 215.
*4+ Jain, P.C. & Verma, S.S. (2006). “Money and Financial System”, Sahitya Bhawan Publication, p. 86.
Posted by Habib Ahmad at 11:19 AM No comments:

Wednesday, August 27, 2008
Introduction

CHAPTER – 1

INTRODUCTION
Non-Banking Financial Company (NBFC) in India began in a small way in the
1960s to serve the need of the saver and investor whose financial need were not
adequate covered by the existing banking system in India. The NBFCs began to
invite fixed deposit from investor and work out leasing deal for larger industrial
firms. In the early decade their operation were on a limited scale and could not
make a significant impact of financial system. However between 1980s and 1990s

the NBFCs were well entered and began to attract a large number of investors
owing to them customer friendly reputation.
The cope of NBFCs is fast growing with multiplication of financial services.
Some of NBFCs are also engaged in underwriting through subsidiary unit and by
offering allied financial services including stock broking, investment banking,
assets management and portfolio management.5[1]
Non-Banking Financial Companies are those companies, which are not
banking companies under the banking regulation Act, but carry out financial
activities of providing finance. These companies may or may not accepting
deposit from the public. These provide lease finance,
housing finance, trade in share, general loan and advance for share trading, hire
purchase specially against automobile.6[2]
In recent times non- baking financial companies (NBFCs) have emerged
substantial contributors to the Indian economics growth by supplementing the

effort of banks and other financial institutions. They pay key role in the direction
of saving and investment .in wave of rapid industrial development &liberalization
of the financial sector, key financial institution and professional have promoted
financial institution to create have promoted financial institution to create a
diversified and competitive financial system.
NBFCs intermediate between saver and investor. These companies also know as
finance companies, lease companies, loan companies etc.
NBFCs: Banking on new areas?
The last couple of years have seen significant developments in the financial
sector that have raised competition across-the-board. Non-banking finance
companies (NBFCs) have perhaps felt the pressure most. Consequently, top-rung
NBFCs are changing tack, and initiating moves to become financial supermarkets.
They are seeking to provide as many services as possible, and their fate will be
decided by how successful they are.
Supermarkets in the making Leading NBFCs have gradually extended their
product portfolio to include asset management companies (AMCs), housing
finance firms and are now readying to enter insurance.
But the NBFCs' latest moves to increase the lines of business may be of a
more permanent nature despite the growing competition from the resource-rich

banks and financial institutions in core and emerging areas. The last few years saw
the traditional boundaries between different categories of financial intermediaries
disappear. Thus, the NBFCs had to contend with heavy competition even in areas
that were their preserve.
Working capital loans were traditionally the preserve of banks, and term
lending that of the financial institutions. Now these sets of institutions move in and
out each other's areas freely. And both have also moved into retail financing, the
traditional preserve of the NBFCs.
The NBFC pillars...
Traditionally, the NBFCs have dominated the market for retail finance.
Their forte has been credit delivery to areas not covered by banks and FIs. Thus,
NBFCs are perhaps better acquainted and more sensitive to the latent needs of the
retail customer. With such new areas as insurance being opened up, top-rung
NBFCs are presented with an opportunity to grow. But these areas fall outside the
NBFCs' traditional sphere of competence and raise questions about the sensibility
of their move.
The issue assumes greater significance considering that the average NBFC
will be pushed down to relatively untouched or untapped areas where credit
information may be scarce. But this perception does not hold water when one

considers that the top NBFCs have one of the lowest levels of non-performing
assets (NPAs) in the financial sector.
Implications of new forays
Some areas where the NBFCs are showing interest are insurance -- recently
opened up for private participation -- and housing finance. Sundaram Finance has
started an associate company that disburses housing loans. This is a good example
of the recent trend to diversify because traditionally housing finance has been the
domain of HDFC and LIC Housing Finance.
The long duration of housing loans and the necessity to access large
quantities of funds has reduced the other finance companies to relatively marginal
players. Recently, one such firm, Home Trust Finance, that was not backed by
institutional money, merged with HDFC. Now, Sundaram Finance has opted to
enter this area.
The positive outcome of such a lateral move into other areas should be a
diversification of the company's revenue stream. That is, reduce the risks by not
putting all the eggs in one basket. Kotak Mahindra, for instance, benefits from a
stream of `other income'. Consequently, its revenues are likely to be among the
least volatile because it derives a significant income from its thriving group
companies engaged in merchant banking, asset management, etc.

Not all NBFCs are entering new areas of asset-based finance. Ashok
Leyland Finance, for instance, plans to launch a finance portal that would be used
to sell the products of the other financial intermediaries. Also it plans to use its
skill in collection to derive a pure service income.
Critical parameters
In the emerging scene, the market for retail customers is where all action is.
Each kind of intermediary brings to the market a unique advantage. Banks, of
course, come with the advantage of being able to access resources at the lowest
cost.
Financial institutions -- mainly ICICI -- access funds at a slightly higher
cost, but unlike banks they are not burdened by higher operating costs. NBFCs
have the biggest disadvantage -- highest cost of funds.
The market for financial loans, however, is not determined solely by the cost
of finance. Service -- which may be loosely described as the convenience offered
to the customer in terms of speed, and product features -- plays a critical role in
volume growth. In such a case, the profitability of operations will hinge on the
ability to keep costs low as also the adaptability of the players.

NBFCs' strengths

NBFCs that succeed are likely to do so by making the most of their ability to
contain risk, adapt to changes and tap demand in markets that are likely to be
avoided by the bigger players.
Risk containment is critical in the financial sector. For a category supposed
to cater to the relatively riskier areas, top-rung NBFCs have proved the most adept
at containing risks. The industrial slowdown of the late 1990s saw the NPAs
increasing sharply in the portfolio of banks and financial institutions. Top-rung
NBFCs which contained risk better were helped by two factors: Lower proportion
of loans to corporates and a more effective recovery mechanism.
The large size of a corporate loan means that a single default has a bigger
impact. NBFCs that lent mainly to the commercial vehicle segment were perhaps
aided by the low proportion of loan to each customer vis-a-vis the total
disbursement. A default would, therefore, have limited impact.
The small size of the loans coupled with a better collection mechanism
resulted in effective risk containment by the NBFCs. This was further aided by the
greater flexibility of the NBFC structure. The flexibility also enables the NBFCs to
act with dispatch when they sense an opportunity.
The other area where the NBFCs have an edge is the long experience in
accessing fixed deposits which gives them access to a database. Lack of reliable
data has often tripped big names in the corporate world.

The top-rung NBFCs have equipped themselves for the fast-changing
environment where all intermediaries are competing for retail finance. An outcome
of the increased competition is that profit margins of the NBFCs will decline.
Moreover, with a huge resources committed to such areas as insurance, which may
take years to attain profitability, profit levels are unlikely to be as high as they
were.
Last year, the share price of quite a few NBFCs rose sharply only to fall
rapidly. Share prices are unlikely to witness any significant, sustained rise this year
in the light of the low premium the stock market attaches to financial services, in
general, and especially with the prospect of a decline in returns on investment in
the near term.
Investors with exposures in such top-rung NBFCs as Sundaram Finance,
Tata Finance or Kotak Mahindra may stay invested as there are possibilities of
moderate gains in the medium term. However, fresh exposures may be
avoided.7[3]

STATEMENT OF PROBLEM:

NBFCs in India have been always been at disadvantage due to lack of
uniform practices and absence of level playing field.
(1) There is no Debt Recovery Tribunal (DRT) for NBFCs for recovery of nonperforming assets.
(2) Borrowing rate for NBFCs is much higher than for bank financial institution.
(3) NBFCs are to the application of moneylender Act in several states.
(4) The recently introduce service tax is applicable only for hire purchase, lease
transaction but bank/ financial institution engaged in advancing loan have
been exempted from it.
NBFCs are facing stiff competition from the bank both public and new
private sector banks. Public sector banks enjoy low deposit cost due to vast
distribution network and its have occupied a majority share in housing finance
where as private bank such ICICI group are actively engaged in retail assets
financing. This increased competition is certainly going to effect the business risk
profile of NBFCs8[4].

Perception problem has also been dogging the NBFCs sector particularly
after CRB scams rocked in financial sector. The perception problem has been well
reflected in the sharp decline of public deposit held with NBFCs by about 28
percentage during the period. The decline through was patially attribute to the
prudential norms suggested by the RBI reflects the reluctance of the people
toward NBFCs. ( Business Standard December 2007)
The poor assets quality of NBFCs is another Challenge before them. Poor
recovery of loan & subsequent write-off mean that balance Sheet 0f various
financing companies reflect a higher percentage of over-dues in comparisons of
total assets.This has affect their equity & profitability which led to their debt
insrument being downgraded. A
study by the credit rating the information service limited (CRISIL) show that
158 NBFCs were downgraded during the period Aprail 1997 to March 2000.
REVIEW OF LITERATURE:
From the purpose of proposed research project entitle „ Role of NonBanking financial Institution in promotion of In Indian Money Market‟.
I study a number of books, journals, newspapers, dissertations and various
reports published time to time. Some of them reviewed are as following.

Shollapur M.R9[5] in his article in „The Indian Journal of Commerce‟ has
revived concept of NBFCs. As per him the abstract NBFCs constituted a
significant part of finan cial system and compliment the service provide by
commercial bank in India. The efficiency of financial services and flexibilities
helped them build a large body of client including small borrower and bigger
corporate establishment. The pace of financial liberalization has a intensified the
competition. As a result, there has been a shift towards strategic perspective
marketing process of NBFCs. This perspective enable them tom predict the future
impact of change and help to move out of week area and grab new opportunity
through continuous monitoring system.
P.C Jain & S.S Verma10[6] has expose to working of money and financial
system prevailing in India. In his book biggest evil of these companies is that for
long years RBI or any other agency regulated them. Hence depositor s have lost
thousand cror of hard earning saving. And in order to safeguard the interest of
depositor.

9[5] Shollapur, M.R. “The Indian Journal of Commerce”, December 2005, p. 101.
10[6] Jain P.C. and Verma, S.S., “Money and Financial System”, Sahitya Bhawan Publication,
2006, p. 127.

R.M Srivastava & Divya Nigam11[7] in his book Management of Indian
Financial Institution background

material for economic growth and financial

institution, types of financial institution, recent trend Indian financial market. He
put enfaces on the fact that the money market has passed through a phase of
substantial adjustment and advancement in recent year.
K.C Shekhar & Lwkshmy Shekhar12[8] in his book has explain of
in India has been rapid development especially in 1990 owing to their high degree
of orientation towards consumers and implication of section requirement. The role
of NBFCs as effective financial intermediaries arise has been well recognized as
they have inherent abilities to take quicker decision, assume risk and customize
their services provided by bank and market the components on a conceptual basis.
D.M Methani S13[9], defines Scope of Indian Money Market in India i.e.,
the money market constitute a light efficiency mechanism for credit control. The
basis function of money market is to provide facilities for adjustment of liquidity
position of commercial bank, Business Corporation.

11[7] Srivastava R.N. and Nigam, D., “Management of Indian Financial Institution”, Himalaya
Publication House.
12[8] Shekhar, K.C. and Shekhar., “Banking Theory and Practice” Vikas Publishing House Pvt.
Ltd., p.339.
13[9] Methani, D.M., “Money Banking International Trade and Public Finance” Himalaya
Publication House, Eleventh Edition, p. 215.

E. N. Murty14[10] suggests the NBFCs remarkable surgeon, advantage and
outlook of NBFCs. In remarkable surgeon under stringent production like
prudential limit and capital adequacy just like M&M Finance, DBS Chula,
Sundaram Finance Sri Ram Transport Finance etc. In outlook NBFCs has been
searching for avenue for future growth, if they get regulatory treatment on for with
the bank. So that large NBFC will be converting and making available credit to
credit.
L M Bhole15[11] in his book define the NBFCs perform a diversified rang of
function and other various financial services to individual, corporate and
institutional client. It also play positive role in accessing certain depositor segment
and clearing credit requirement of borrowers. It also discussing the major
financial market in India. Along with related financial instrument and services i.e.
call money, call loan, other short term intrest rate instrument and the recent
development in money market.

14[10] Murty, E. N. “Chartered Financial Analyst” The Analyst, March 2007.
15[11] Bhole, L. M. “Financial Institution and Market”, Tata McGraw Hill, 3rd Edition. p 242-311.

Shashi K. Gupta, Nisha Gupta & Neeti Gupta16[12] in his book define
money market is an opportunity for balancing the short term surplus fund of the
investor with the short term requirement to borrowers. Another feature of
money market is that they are liquid with varying degree. It also define NBFCs
play an important role in financial intermediaries because they can take quick
decision making assume greater risks and design their product to the need of
customer.
SCOPE OF THE STUDY:
The scope of the study is confined to understanding the Non-baking financial companies
in promotion of Indian Money Market. Role of NBFC‟s can be studied in a group of companies.
On one hand its role on functional and performance in different areas of group of companies.
However, the scope of research encompasses a much wider spectrum. So that the present study is
an attempt to assay the role of NBFC‟s in promotion of Indian Money Market.
OBJECTIVES OF THE STUDY:
The objectives of the study are as follows:
1.

To review the concept of NBFC‟s.

2.

To review the growth and development of NBFC‟s.

3.

To examine the role of NBFC‟s in promotion of Indian Money Market.

4.

To identify the problem of NBFC‟s.

RESEARCH METHODOLOGY:

16[12] Gupta, S. K., Gupta, N. & Gupta, N. “Financial Institution and Market”, Kalyani
Publication New Delhi, p 2.1-17.1.

The research methodology adopted is secondary in nature .The data to
study the performance growth and the current problems of the NBFC’s in
promotion of Indian Money Market has been collected from journals,
newspapers, books, magazines and internet. Also self-interpretation is made with
the help of collected material.
LIMITATIONS OF THE STUDY:
The limitations of the study are as follows:
1.

The study is only confined to promotion of Indian Money Market.

2.

The second limitation of the study was the shortage of finance due to which the other
counters could not be visualized for survey work, keeping in view the extensive nature of
the study and the limitation of available present data.

ORGANIZATION OF THE STUDY:
The dissertation has been divided into five chapters, each chapter dealing with a specific
aspect of NBFC in promotion of Indian Money market.


The first chapter is an introduction.



The second chapter deals with the conceptual approach of NBFC‟s.



The third chapter deals with performance of NBFC‟s in India.



The fourth chapter viewed the role of NBFC‟s in promotion of Money Market.



Lastly the fifth chapter comprises of conclusions and suggestions.

Posted by Habib Ahmad at 12:56 PM No comments:
http://habibahmadazmi.blogspot.in/

http://www.ficci.com/sector/3/Add_docs/Financial-Foresights-April2013.pdf

RBI Bans 0% EMI Loans, Says Customers Must Be Told Real Interest Rate
15 comments Written on September 26th, 2013 by Deepak Shenoy
Categories: Banks, HDFCBANK, ICICI Bank

Now I look really ignorant, so I will first say, Sorry. And apologies to Economic Times.
I had said in an earlier post that ET was probably inventing the story that 0% EMIs will be
banned, but they are now officially in a no-no land, with RBI‟s new notification. It really says
three things:
1. Pass On The Benefits, Charge Full Interest

Banks tell you there is 0% interest when you buy certain goods. But in reality there is no such
thing. The manufacturer or dealer will give the bank the interest - it‟s just that you don‟t know
how much. And you pay the full price of the product. Effectively, the manufacturer gave a
discount to the bank instead. But the RBI says that distorts the understanding of the customer
about what price he is paying and what rate of interest the loan is actually at:
In such instances, it is the responsibility of the banks, who are/may be using their good offices to
get the better bargain, to make the customers fully aware of these benefits and also pass on the
benefits to them fully and indiscriminately while sanctioning loan for the purchase. More
importantly, this has to be done directly without tampering with the applicable rate of
interest (RoI) of the product. If there is a discount offered in the price of a product, the loan
amount sanctioned for the purchase should be after taking into account the discount, rather than
giving effect to the benefit by reducing the RoI.
So now, if you were to pay Rs. 44,000 for a refrigerator at 0% interest for one year, RBI thinks
the banks should do this:
a) Tell the customer he is actually paying Rs. 39,285 for the fridge if he takes a loan.
b) Then, tell the customer to pay the 12% interest that should really apply, which means he pays
a total of Rs. 44,000 over the year.
Guess what will really happen?
Customers will say - wait, if I paid Rs. 39,285 right now, I can take the fridge no? I‟ll do that
instead, or wait till I save that money (why pay it to the bank!). Or, even better, I‟ll pay the
money, but I‟ll take the loan from someone else.

Another problem is that while manufacturers are happy to do such deals with banks, they don‟t
want to do them with customers. One reason is that they feel they should maintain a certain price
point in the market, and that price cannot be flexible based on whether you take a loan or not.
With a certain MRP and then a much lower dealer price, every dealer will discount to the
maximum they can; and without 0% EMIs sales will drop because people hate to pay interest.
This will result in a huge drop in sales, obviously.
But I like this change in the sense that it makes customers aware there is no free lunch, and then
they can negotiate better because they see the real underlying prices. Since my only grouse was
that customers couldn‟t get that lower price anyhow, this change will ensure we the consumers
see the real prices we pay.
Secondly, manufacturers are effectively paying commissions to banks, and charging a customer
upfront; effectively banks aren‟t revealing the real interest rate of the loan. This doesn‟t allow for
easy comparison or our own ability to understand if we can afford the loan. Opening up the
interest rate might throw some surprises, like a bank charging 18% on what you thought was a
0% EMI scheme.
2. Don’t Hide Interest as Processing Fees

RBI has now stated that you can‟t say a product is 0% EMI, and then charge a hefty processing
fee. This again hides the real interest rate behind the product, so they say show that separately.
3. Don’t Let Merchants Charge Customers A Fee for Debit Cards

Banks charge merchants about 1% (limited by RBI diktat) for debit card transactions. Some of
these merchants charge those fees back to the customer. That is not allowed, as the merchant
agreement bans such an extra charge, and people tend to go back to cash when they must pay
that much extra, which leaks both cash out from liquidity and also creates a money laundering
situation (no taxes on cash?). RBI wants banks to terminate relationships with merchants that
charge.
I wonder if this affects petrol pumps - who add the extra charge for both credit and debit cards.
And then, I wonder why only debit cards - surely, credit cards have such agreements too? (But
the charges are higher, so RBI is okay with a pass-through, I suppose)
Impact: This will hurt :




Retailers - both online and offline. Companies impacted are Future Retail (Big Bazaar and
Central), Shopper’s Stop, Trend (Landmark and Westside). While Flipkart continues to have the
EMI schemes on, I believe that might go out too - even at other online retailers.
Banks - their credit card divisions will show a substantially lower consumer durable offtake,
even if they follow the circular. The largest are HDFC Bank and ICICI Bank.



Durable Manufacturers: Negative for Videocon and Voltas. Possibly car manufacturers who
wanted to offer low interest rates on loans. And mobile phone and tablet manufacturers (most
are unlisted).

This will help:



NBFCs: They can carry on with their zero EMI offers, it seems, since the regulation applies only
to banks. (But you never know). Good for Bajaj Finserv, Reliance Capital and the like.
The Current Account Deficit: (It’s not a stock) Most durables that hit the 0% EMIs seem to be
imported (TVs, Cars, Mobile phones) So in one way a reduction in those sales will positively
impact the current account.

Indian Banks in the US are already down over 2%. I wonder how markets will react.
You might also like:

Bank Stocks Tumble 4.8% on RBI News

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This entry was posted on Thursday, September 26th, 2013 at 1:29 AM and is filed under Banks, HDFCBANK,
ICICI Bank. You can subscribe to any comments to this entry via RSS 2.0. Both comments and pings are currently
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About the Author:
http://www.capitalmind.in
The man behind Capital Mind. Deepak is a co-founder at MarketVision, a financial knowledge company.
Deepak also provides data research and consulting services, and now lives in Bangalore. Connect with
him at [email protected].

15 comments “RBI Bans 0% EMI Loans, Says Customers
Must Be Told Real Interest Rate”
Will this not affect all the e commerce business since they also 0% EMIs after tying up with the
banks?

Anuj
09.26.13 at 10:18 AM
Permalink

While this is certainly good, I am sure the people who are taking the retail folks‟ money (aka
bizmen, banks, GOI etc) will come up with other schemes to milk. And as you have rightly
observed in the initial post on RRajan, he isn‟t going to stick around in RBI for ever.. Still, its
certainly something to cheer about. The real good thing will be if customers start asking “So in
what other areas are we being cheated like this”…
Long term solution is to include as a compulsory subject, the basics of everyday commerce,
debit/credit cards, income/sales taxes etc at the 7th-9th standard levels. There are just too many
otherwise brilliant people who would ace thru any number of tests but who run away at the
mention of drawing up their own IT filings. And the “products” are mis-named to suit the sellers
(aka banks etc). For example, “credit card” should be called as “loan card” since that is what it is
to the “consumer”. And debit card should be called as “cheque card” or “instant cheque card”
since that is what its functionality is – again to the consumer. Just doing this alone may make
people think twice before the ubiquitous swiping….

feltra
09.26.13 at 11:05 AM
Permalink

Thanks feltra ji. Great points.
The problem remains lack of knowledge and people just don‟t have the time. One day, when they
do find the time, it will be because they got conned!

Deepak Shenoy
09.26.13 at 11:09 AM
Permalink

Incomplete sentence where you mentioned Flipkart

akshat
09.26.13 at 11:18 AM
Permalink

The problem is about disclosures not being enough, not being clear and not being simple about
costs / charges involved in 0% EMI schemes. This is true with several other financial products as
well. I do not think there is any point in banning this scheme as it will come up with in some
other way with some other name. Come on, you can‟t, in a free and fair market take away the
freedom to attract customers and sell your goods. There will be innovative marketing and
financing methods coming up everyday. I do not think RBI is being any fair by banning a
particular product.
Idea should be to formulate EFFECTIVE regulations which makes it mandatory to disclose all
cost structure, expenses, commissions in a clear way while selling a scheme and let people make
informed decision and know who are parties with vested interest. Things like color coding MFs
as per their inherent risk however is again a silly example of coming up with such regulation.
By banning such schemes, I think RBI is micro-managing it. There will be 80:20 schemes, there
will be 0% EMI schemes, there will be cash back schemes and there will be direct-moneytransfer schemes! Where all will you run plugging holes RBI?
Also, I am all for the idea of including Financial Management as a subject for children. And also
for grown-ups.

Mehul
09.26.13 at 12:24 PM
Permalink

This doesn‟t make any sense whatsoever, does it? If the bank and company decided to cut a
discount deal, why does it bother RBI? I don‟t get it….
“But I like this change in the sense that it makes customers aware there is no free lunch, and then
they can negotiate better because they see the real underlying prices.”
Nope, the customer won‟t see the real underlying prices ever. This channel will be replaced by
something else which might result in a lower discount eventually. Do you really think that this
rule will make the underlying price visible to the customer?
Next the RBI will say every company must disclose their true manufacturing cost to the
customer so that the customer knows exactly how much profit the manufacturer is making. Don‟t
have to explain why this is stupid, do I? So, why is this rule not stupid?
Moreover, I dislike the micromanagement that RBI does… very annoying when it can‟t do its
main job properly.

DJ
09.26.13 at 1:53 PM
Permalink

Am not really a fan of removing this but it does distort the image of it being a zero interest loan.
If RBI were to force banks to reveal the actual interest rate they make on the loan, it will tell
people what they‟re really paying. If I could pay lesser on an upfront payment, I wouldn‟t bother
with the EMI!
I agree that knowing the manufacturers cost is stupid – but this is not the manufacturer‟s cost,
this is the manufacturers revenue. Manufacturers are allowed to sell to dealers at a lower and
confidential price while the MRP is higher – this is legal and the lower price needn‟t be
disclosed. However a bank is not part of the supply chain. It is simply a financier and thus,
regulated by the RBI. If the bank can cut a better deal because of its larger influence, the RBI is
saying that since you‟re not a dealer or part of hte supply chain, your cutting a deal is simply on
the premise that the customer is more likely to buy with an EMI scheme (hidden as 0% interest),
rather than pay a lower price (if the latter were true, the manufacturer would have given the
lower price to the dealer).

Now banks to protect their business will tell manufacturers to not give these lower figures to the
dealers. This is now a cartel (and it has become one, though RBI hasn‟t mentioned that) which
now spoils the supply chain, and hurts the consumer who‟s not being offered the lower rate if he
chooses to pay the full lower amount direct. The bank isn‟t supposed to interfere like that, and in
doing so it muddies the waters about what interest rate the consumer is paying.
So I‟m of the belief that this might actually be a good thing, manufacturers should then attempt
to push sales by directly discounting products to customers. RBI is a good regulator in this
regard, and I think this is the kind of step regulators must take to reduce cartel impacts.

Deepak Shenoy
09.26.13 at 4:09 PM
Permalink

I‟m pretty sure people can and do negotiate a lower upfront payment today. There is no need to
know that 0% EMI isn‟t 0% to do that and if someone is making upfront payments, the mode of
payment is factored into the bargaining process. So, to claim that knowing this would open the
floodgates to better negotiations on upfront payment amount is something I don‟t agree with. In
my view, it already happens and this would be irrelevant.
In fact, its quite possible that the upfront discounts might actually decrease because of the
reduction in sales to people who really could only buy on credit. The underlying discounted price
is a fictitious number that is available only in the presence of this sales channel. It might not be
the same in the absence of this channel (because of the number of sales changes, its convenience
in managing customer perceptions, way to target different customer segments, etc) so we can‟t
just use the same numbers.
I didn‟t see a problem in your second para. The argument seems to be that the bank is not part of
the supply chain. So, what?
If the RBI is interested in cracking financing cartels that distort, I can point them to hundreds of
more urgent ones that need attention, including some of their own policies. They themselves run
a financing cartel for govt debt that distorts. So, don‟t tell me that they suddenly are so bothered
about a financing cartel. In fact, who are they kidding, they are doing this now because they want
to reduce imports in an indirect manner. Lets be honest at least.
At the end of the day, this might be a net +ve measure, but I disagree with the analysis on the
impact on upfront payments and on the goodness of the RBI as a regulator.

DJ
http://capitalmind.in/2013/09/rbi-bans-0-emi-loans-says-customers-must-be-told-real-interest-rate/

Bajaj Finserv Lending's Summary
Bajaj Auto Finance Limited which was incorporated on 25th March, 1987 with the main objective of
financing of two-wheelers and three-wheelers manufactured by Bajaj Auto Limited, with due approvals,
has changed its name to Bajaj Finance Limited with effect from 6th September, 2010 which reflects in its
current activities. Over the years, the Company has added more lending products to its portfolio and is
now a diversified consumer and small business lending company. The company currently offers six
lending products including loans for two-wheelers and three-wheelers, consumer durables, small
business loans, construction equipment finance, mortgages and loan against securities.
A premier Non Banking Finance Company (NBFC) we a credit rating of FAAA/Stable, the highest for any
NBFC in the country. We have a widespread presence as one of the largest retail financing companies in
India, having a network of over 8000 two-wheeler and consumer durable partners serviced through 54
locations. Our rich experience of over 20 years in consumer finance has delighted over 4.6 million
customers.
Our Products & Services:
• Loans Against Property
• Personal Loans
• Business Loans
• Home Loans
• Infrastructure Equipment Finance
• Loans Against Securities
• Consumer Durable Loans
As a value-added service we also provide insurance services like ‘Group Term Policy’ and ‘Group Term
Suraksha’ bundled with our products.
Specialties

• Loans Against Property
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• Business Loans
• Home Loans
• Infrastructure Equipment Finance
• Loans Against Securities
• Consumer Durable Loans

Bajaj Finserv Lending's Experience
Digital Marketing
Bajaj Finserv Lending

Public Company; 1001-5000 employees; Financial Services industry
October 2012 – Present (1 year 10 months)
premier NBFC
Bajaj Finserv Lending

Public Company; 1001-5000 employees; Financial Services industry
July 1987 – Present (27 years 1 month)
For the quarter ended 30th June, 2010, Bajaj Finance Limited reported revenues of Rs. 296.74 Cr., Profit
after Tax of Rs.46.78 Cr. and Closing book size of Rs. 4937.24 Cr.
http://in.linkedin.com/in/bajajfinservlending

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