Brief about RNBC

a) Residuary Non-Banking Company is a class of NBFC which is a company and has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner and not being Investment, Asset Financing, Loan Company.

b) A RNBC can accept deposits for a minimum period of 12 months and maximum period of 84 months from the date of receipt of such deposit. They cannot accept deposits repayable on demand.

NPA-NON-PERFORMING ASSET & SARFAESI

It means once the borrower has failed to make interest or principal payments for 90 days, the loan is considered to be a

non-performing asset.

SARFAESI Act and Rules

SARFAESI Act (The Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002)

Register with RBI

A company incorporated under the Companies Act, 1956 and desirous of commencing business of non-banking financial institution as defined under Section 45 I(a) of the RBI Act, 1934 should comply with the following:

a) It should be a company registered under Section 3 of the companies Act, 1954

b) It should have a minimum net owned fund of Rs 200 lakh.

Deposits in NBFC:

a) Presently, the maximum rate of interest an NBFC can offer is 12.5%. The interest may be paid or compounded at rests not shorter than monthly rests.

b) The NBFCs 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.

c) The deposits with NBFCs are not insured.

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

Difference between BANK & NBFC

NBFCs lend and make investments and hence their activities are akin to that of banks; however there are a few differences as given below:

i. NBFC cannot accept demand deposits;

ii. NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself;

iii. Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks.

Different types/categories of NBFCs registered with RBI:

 Asset Finance Company(AFC)

 Investment Company (IC)

 Loan Company (LC)

 Infrastructure Finance Company (IFC)

 Infrastructure Debt Fund

 Non-Banking Financial Company - Micro Finance Institution (NBFCMFI

 Non-Banking Financial Company – Factors (NBFC-Factors)