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Today we will cover the topic ‘NBFC’ from Financial Management of CS Executive is discussed below
NBFC (Non Banking Financial Company)
What is “NBFC”?
NBFC is a company registered under Companies Act, 2013 or earlier Companies Act or an institution engaged in the business of loans and advances, acceptance of deposits under different schemes and to invest this money in any manner like acquisition of shares, securities, bonds, hire purchase etc.. RBI Act, 1934 includes a Financial Institution which is a company or a non-banking institution which is a company having its principal business of receiving the deposits under any arrangement or scheme or in any other manner, or lending in any manner as a NBFC.
NBFC may be categorized as:
- Loan Companies
- Investment Companies
- Hire Purchase Finance Companies
- Equipment Leasing Companies
- Mutual Benefit Finance Companies
- Housing Finance Companies etc.
Asset Income Approach
In order to identify a particular company as an NBFC, consider both, the assets and the income pattern from the last audited balance sheet to decide principal business.
- Financial Assets are more than 50% of its Total Assets (netted by Tangible Assets)
- Income from Financial Assets should be more than 50% of the gross income.
Net owned Fund requirement
Minimum Rs. 200 Lakhs at all the times unless otherwise specified.
- A company with main object clause for carrying out NBFI activities (check object clause)
- Obtain catalog of requirements from RBI website
- Fill up prescribed form, available on RBI website, according to instructions with the requirements
- Fill up the e-form provided in excel format
- Get the required certifications of the statutory auditors/chartered accountants (as the case may be)
- Submit softcopy on RBI website before submission of the hardcopy.
- Obtain the printout of successful submission of the softcopy. Mention the date of submission onthe print if the date is not appearing in print.
- Submit the hardcopy application in duplicate to theregional office of RBI.
- Each page in the application file should benumbered.
- Preparetheapplication in triplicate so that a replica is with the applicant for future reference.
Commencement of Business
- NBFC must commence its business within 6 months from the date of CoR.
- If not commenced within 6 months, CoR will stand withdrawn.
- No change in control prior to the commencement of its business.
The proper explanation of the Non Banking Financial Company is available for CS PREPARATION in Online classes for CS Executive.
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