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NBFC Meaning : -A Non – Banking Financial Corporation is a company incorporated under the Companies Act 2013 or 1956 which is engaged in the business of Loans and Advances, Acquisition of stocks, equities, debt etc issued by the government or any local authority. The main objective of this type of a company is to accept deposits under any scheme or manner.

According to section 45-I (c) of the RBI Act, a Non – Banking Company carrying on the business of a financial institution will be an NBFC. It is governed by the Ministry of Corporate Affairs as well as the Reserve Bank of India.

• Business Activities of NBFC Includes: Loans & advances, acquisition of shares/ stocks/bonds/ debentures/ securities that are issued by govt or local authority or other marketable securities of similar nature, like leasing, hire-purchase, insurance business, chit business etc.
• Business Activities of NBFC does not include: Agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services, sale/ purchase/ construction of immovable property.

Types of NBFCs: -NBFCs are categorized

a) in terms of the type of liabilities into Deposit and Non-Deposit accepting NBFCs,

b) non deposit taking NBFCs by their size into systemically important and other non-deposit holding companies
(NBFC-NDSI and NBFC-ND) and

c) by the kind of activity they conduct.

1. Asset Finance Company (AFC)
2. Investment Company (IC)
3. Loan Company (LC)
4. Infrastructure Finance Company (IFC)
5. Systemically Important Core Investment Company (CIC-ND-SI)
6. Infrastructure Debt Fund: Non- Banking Financial Company (IDF-NBFC)
7. Non-Banking Financial Company - Micro Finance Institution (NBFC-MFI)
8. Non-Banking Financial Company – Factors (NBFC-Factors)
9. Mortgage Guarantee Companies (MGC)
10. NBFC- Non-Operative Financial Holding Company (NOFHC)

The following NBFC’s are not required to obtain any registration with the Reserve Bank of India:

1. Core Investment Companies – (assets are less than 100 crore or public funds not taken)
2. Merchant Banking Companies
3. Companies which are engaged in the business of stock-broking
4. Housing Finance Companies
5. Companies engaged in the business of Venture Capital.
6. Insurance companies holding a certificate of registration issued by IRDA.
7. Chit Fund Companies as defined in the Sec 2 clause (b) of the Chit Fund Act, 1982
8. Nidhi Companies

The procedure to incorporate an NBFC is:

1. A company should first be registered under the Companies Act 2013.
2. The minimum net owned funds of the Company should be Rs. 2 Crore.
3. There should be a minimum of 1 Director from the same background or a Senior Banker as a full-time director in the Company.
4. The CIBIL records of the Company should be clean
5. After all of the above conditions have been satisfied the online application on the website of RBI should be filled and submitted along with the requisite documents.
6. A CARN Number will be generated.
7. A Hard copy of the application also has to be sent to the regional branch of the Reserve Bank of India.
8. After the application is properly scrutinized, the License will be given to the Company.




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