Every NBFC, i.e. Non-Banking Financial Companies are categorized in the following terms:
- Types of liabilities into Deposit and Non-Deposit accepting NBFC registrations
- Non-Deposit taking NBFCs: These NBFCs are categorized based on by their size like NBFC-NDSI and NBFC-ND.
- By the kind of activity they conduct
Because of these broad categorization of NBFC registrations, we have discussed a range for RBI approved NBFC registration models in India. Read More: Trademark Assignment
ASF: Asset Finance Company
An AFC is a financial institution whose principal business is of financing the physical assets of any business. An AFC does this by supporting economic activities, such as:
- Automobiles
- Tractors
- Lathe Machines
- Generator Sets
- Earth moving machines
- Material-handling equipment
These assets are purchased for moving its power and general purpose industrial machines.
Here, the principal business is the aggregate of financing real or physical assets supporting economic activity. Such income must not be less than 60% of its total assets and total income, respectively.
IC: Investment Company
Investment Company is a financial institution carrying whose principal business is the acquisition of securities,
LC: Loan Company
Loan Company refers to a financial institution whose principal business is of providing the finance. An LC provides such finances by extending loans or advances. It can also include activities other than its own but an LC must not include an Asset Finance Company.
IFC: Infrastructure Finance Company
IFC is an NBFC registration with the following features:
- An IFC deploys at least 75 percent of its total assets in infrastructure loans
- An IFC must maintain a minimum Net Owned Funds of 300 crore rupees
- An IFC must maintain a minimum credit rating of ‘A ‘or equivalent
- An IF must have a CRAR of 15%
SI-CIC: Systemically Important Core Investment Company
CIC-ND-SI is an NBFC registration carrying on the business of acquisition of shares and securities which satisfies the following conditions:-
- it holds not less than 90% of its Total Assets in the form of investment in equity shares, preference shares, debt, or loans in group companies;
- its investments in the equity shares (including instruments compulsorily convertible into equity shares within a period not exceeding ten years from the date of issue) in group companies constitute not less than 60% of its Total Assets;
- it does not trade in its investments in shares, debt, or loans in group companies except through block sale for dilution or disinvestment;
- it does not carry on any other financial activity referred to in Section 45I(c) and 45I(f) of the RBI act, 1934 except investment in bank deposits, money market instruments, government securities, loans to, and investments in debt issuances of group companies or guarantees issued on behalf of group companies.
- Its asset size is ₹ 100 crore or above
- It accepts public funds
IBF: Infrastructure Debt Fund
Non-Banking Financial Company IDF-NBFC is a company which the RBI registers as an NBFC to facilitate the flow of long-term debt into infrastructure projects. IDF-NBFC raises resources through the issue of Rupee as well as Dollar denominated bonds of minimum five-year maturity. Only an IFC (Infrastructure Finance Companies) can sponsor IDF-NBFCs. Read More: Trademark Restoration
Non-Banking Financial Company- Micro Finance Institution
Micro Finance Institution (NBFC-MFI) is a non-deposit taking NBFC having not less than 85% of its assets like qualifying assets that satisfy the following criteria:
- Loan disbursed by an NBFC-MFI to a borrower with a rural household annual income not exceeding ₹ 1,00,000 or urban and semi-urban household income not exceeding ₹ 1,60,000;
- Loan amount does not exceed ₹ 50,000 in the first cycle and ₹ 1,00,000 in subsequent cycles;
- Total indebtedness of the borrower does not exceed ₹ 1,00,000
- Tenure of the loan not to be less than 24 months for loan amount in excess of ₹ 15,000 with prepayment without penalty
- Loan to be extended without collateral
- Aggregate amount of loans given for income generation is not less than 50 percent of the total loans provided by the MFIs
- Loan is repayable in weekly, fortnightly, or monthly installments at the choice of the borrower
NBFC-F: Non-Banking Financial Company – Factors
NBFC-Factor is a non-deposit-taking NBFC registrations whose principal business is of factoring. Any factoring business’s financial assets must comprise of atleast half of its total assets. Also, the income that a factoring business yields must be atleast half of its gross income.
MGC: Mortgage Guarantee Companies
MGCs are financial institutions. In an MGC, at least 90% of the business turnover is Mortgage Guarantee business. Also, an MGC is a company in which atleast 90% of the gross income is from Mortgage Guarantee business. The net owned fund in an MGC is a minimum of 100 crore rupees. Read More: DPL License
NOFHC: Non-Operative Financial Holding Company
NBFC-NOFHC is a financial institution in which the RBI permits the promoter or promoter groups to set up a new bank. This types of NBFCs are completely owned Non-Operative Financial Holding Company (NOFHC). An NOFHC holds the bank as well as other financial services companies regulated by the Apex Bank or other financial regulators. But the regulations are limited to the extent as permitted as per the applicable regulatory prescriptions.
