NBFC Full Form | What is the Full Form of NBFC
NBFC Full Form - Non-Banking Financial Companies
- Here, you’ll get the solution of following NBFC related questions: what is the full form of NBFC, full form of NBFC in financial sector, NBFC full form in banking
Non-Banking Financial Companies
- NBFC stands for Non-Banking Financial Companies.
- It refers to financial institutions that provide banking services without having a banking license or without fulfilling the legal definition of a bank.
- These institutions are incorporated or registered under the businesses Act, 1956 and do business as a non-banking financial organization as defined under Section 45-IA of the RBI Act, 1934.
- An NBFC is especially engaged within the business of loans, acquisition of shares, stocks, bonds issued by the govt , insurance business, chit fund business, and more.
- A corporation whose main business is said to agriculture activity, industrial activity, sale, purchase/construction of immovable property can't be an NBFC.
- The major difference between NBFC and bank is that in a Bank we will deposit money and withdraw it once we need it, but NBFC doesn't accept deposits and don't provide you the facility to withdraw money once you need it.
- Deposits in NBFC aren't treated as savings they're basically future deposits or premiums, e.g., the premium you buy your LIC policy, insurance policy, etc.
Examples of NBFC
- Insurance companies which are regulated by IRDA
- Merchant Banking companies, stockbroking companies, risk capital fund which are regulated by SEBI
- Housing finance companies, which are regulated by NHB (National Housing Bank)
- Chit fund companies, which are defined in clause (b) of section 2 of the Chit Funds Act, 1982, and are regulated by the government
- Nidhi companies, which are notified under section 620A of the businesses Act, 1956, and are regulated by the company ministry.
Eligibility of an NBFC for registration with RBI
- A company registered under the businesses Act, 1956 and willing to start out a business of non-banking financial organization as defined under Section 45 IA of the RBI Act, 1934 is required to fulfil the following conditions:
- It should be registered under Section 3 of the businesses Act, 1956.
- It should own a minimum net fund of Rs. 2 crore. However, the need of minimum net owned fund for specialized NBFCs could also be different.