...Manual on Financial and Banking Statistics 6. NON-BANKING FINANCIAL COMPANIES The activities of non-banking financial companies (NBFCs) in India have undergone qualitative changes over the years through functional specialisation. The role of NBFCs as effective financial intermediaries has been well recognised as they have inherent ability to take quicker decisions, assume greater risks, and customise their services and charges more according to the needs of the clients. While these features, as compared to the banks, have contributed to the proliferation of NBFCs, their flexible structures allow them to unbundle services provided by banks and market the components on a competitive basis. The distinction between banks and non-banks has been gradually getting blurred since both the segments of the financial system engage themselves in many similar types of activities. At present, NBFCs in India have become prominent in a wide range of activities like hire-purchase finance, equipment lease finance, loans, investments, etc. By employing innovative marketing strategies and devising tailor-made products, NBFCs have also been able to build up a clientele base among the depositors, mop up public savings and command large resources as reflected in the growth of their deposits from public, shareholders, directors and other companies, and borrowings by issue of non-convertible debentures, etc. Consequently, the share of non-bank deposits in household sector savings in financial assets...
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...Determinants of profitability of Non Bank Financial Institutions’ in a developing country: Evidence from Bangladesh Md. Sogir Hossain Khandoker* Associate Professor, Department of Finance Jagannath University, Dhaka 1100; & Ph.D fellow, Department of Business Administration Assam University, Silchar, India E-mail: sogir.nu@gmail.com Cell: +88 01190 47 6187 Professor Dr. R. K. Raul Dean, Department of Business Administration Assam University, Silchar, India E-mail: rkraul@yahoo.com S. M. Galibur Rahman BBA, Department of Finance, Jagannath University, Dhaka 1100 E-mail: galibju@gmail.com *Corresponding author Determinants of profitability of Non Bank Financial Institutions’ in a developing country: Evidence from Bangladesh Abstract This project examines the determinants of the profitability of firms in the Non Banking Financial Institution (NBFIs) industry of Bangladesh. Financial Performance of a financial institution basically depends on its some key financial determinants. Specially operating efficiency is main influencing factor which is calculated through operating income. Besides it capital Structure composite of equity and liability, operating expense, total asset significantly affect the profitability of any NBFI company. In addition term deposit also affects the profitability though that is statistically not significant. Different Statistical techniques such as correlation matrix, multiple regressions have been used to determine the relationships between...
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...Asked Questions on NBFCs QUES -1 What is a Non-Banking Financial Company (NBFC)? ANS -1 A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 and is engaged in the business of loans and advances, acquisition of shares/stock/bonds/debentures/securities issued by Government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale/purchase/construction of immovable property. A non-banking institution which is a company and which has its principal business of receiving deposits under any scheme or arrangement or any other manner, or lending in any manner is also a non-banking financial company (Residuary non-banking company). QUES 2. NBFCs are doing functions similar to banks. What is difference between banks & NBFCs ? ANS 2. NBFCs are doing functions akin to that of banks, however there are a few differences: (i) a NBFC cannot accept demand deposits; (ii) it is not a part of the payment and settlement system and as such cannot issue cheques to its customers; and (iii) deposit insurance facility of DICGC is not available for NBFC depositors unlike in case of banks. QUES-3. Is it necessary that every NBFC should be registered with RBI? ANS 3. In terms of Section 45-IA of the RBI Act, 1934, it is mandatory that every NBFC should be registered...
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...Working Group on the Issues and Concerns in the NBFC Sector Report and Recommendations RESERVE BANK OF INDIA August 2011 2 ABBREVIATIONS AND ACRONYMS AFC ALM BIS CIC-ND-SI Asset Finance Company Asset Liability Management Bank for International Settlements Systemically Important Non-Deposit Taking Core investment Company Capital Market Exposures Certificate of Registration Commercial Paper Capital to Risk Weighted Assets Ratio Commercial Real Estate Financial Companies Regulation Bill Foreign Direct Investment Investment Company Inter Corporate Deposits Infrastructure Finance Company Initial Public Offering Insurance Regulatory and Development Authority Joint Parliamentary Committee Know Your Customer Loan Company Liquidity Coverage Ratio Lender Of Last Resort Micro Finance Institution CME CoR CP CRAR CRE FCRB FDI IC ICD IFC IPO IRDA JPC KYC LC LCR LOLR MFI 3 M&A NBFC NBFC-ND-SI Mergers and Acquisitions Non Banking Financial Company Systemically important Non Deposit taking Non Banking Financial Company Deposit taking Non Banking Financial Company Non Deposit taking Non Banking Financial Company Non Banking Financial Institutions Non-convertible debentures Net Owned Funds Non-Performing Asset Over-the-counter Public Financial Institution Priority Sector Lending Reserve Bank of India Residuary Non Banking Company Return on Assets Return on Equity Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Scheduled Commercial Bank...
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...A Comparative Study Of NBFC in India 2010 Table of Contents EXECUTIVE SUMMARY .................................................................................................................. 3 CHAPTER-1 INTRODUCTION ......................................................................................................... 4 1.1 Types Of NBFC‘s ......................................................................................................................... 5 1.2 Regulations of NBFC‘s ................................................................................................................. 6 1.3 Guidelines for new deposits .......................................................................................................... 8 1.4 Responsibilities ........................................................................................................................... 11 1.5 Current Scenario ......................................................................................................................... 12 CHAPTER-2 Literature review ......................................................................................................... 14 2.1 Importance Of NBFC‘s ............................................................................................................... 15 2.2 Role of NBFC‘s .......................................................................................................................... 16 2.3 On Global Crisis .........
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...NOTE ON NON-BANKING FINANCIAL COMPANIES DEFINITION OF NON BANKING FINANCIAL COMPANY Prior to enactment of RBI (Amendment) act, 1997 w.e.f. 9.1.1997 the RBI Act,1934 did not contain a definition for NBFC. Clause (f) of section 45-I inserted by RBI (Amendment) Act 1997, provided the definition of a NBFC. According to this clause: NBFC means- (i) a financial institution which is a company; (ii) a non- banking institution which is a company and which has as its principal business the receiving of deposits, under any scheme or arrangement or in any other manner, or lending in any manner; (iii) such other non-banking institution or class of such institutions, as the bank may, with the previous approval of the Central Government and by notification in the Official Gazette, specify. Financial institution means any non-banking institution which carries on as its business or part of its business any of the following activities, namely: (i) the financing, whether by way of making loans or advances or otherwise, of any activity other than its own; (ii) the acquisition of shares, stock, bonds, debentures or securities issued by a govt. or local authority or other marketable securities of like nature; (iii) letting or delivering of any goods to a hirer under a hire-purchase agreement as defined in clause (c) of section 2 of the Hire Purchase Act,1972 (26 of 1972); (iv)...
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...INTRODUCTION A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 and is engaged in the business of loans and advances, acquisition of shares/stock/bonds/debentures/securities issued by Government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale/purchase/construction of immovable property. A non-banking institution which is a company and which has its principal business of receiving deposits under any scheme or arrangement or any other manner, or lending in any manner is also a non-banking financial company (Residuary non-banking company). NBFCs are doing functions akin to that of banks; however there are a few differences: (i) An NBFC cannot accept demand deposits; (ii) An NBFC is not a part of the payment and settlement system and as such an NBFC cannot issue cheques drawn on itself; and (iii) Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available for NBFC depositors unlike in case of banks. 1.2 OBJECTIVES This study represents that how NBFCs are making more profit than banks in INDIA. What types of NBFCs are there in India and how they are regulated through various regulatory bodies. Objectives of this study is to compare various NBFCs from different Sector. To identify...
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...Non Bank Financial Intermediaries INTRODUCTION • NBFCs are privately owned, decentralized and relatively small-sized financial intermediaries. • Some are primarily engaged in fund-based activities and others provide financial services of diverse kinds. • The former are know as Non Banking Financial Companies (NBFCs) and the latter are known as Non Banking Financial Services Companies (NBFSCs). OVERVIEW • Two parts 1. 1995-96 2. 2002-03 • During 1995-96, NBFCs had undergone radical transformation. • The post 1995 overview is depicted with whatever information is available. NATURE • There are thousands of NBFCs and only a small proportion of them report to the RBI. • The RBI (Amendment) Act, 1997 defines NBFC as an “institution or company whose principal business is to accept deposits under any scheme or arrangement or in any other manner, and to lend in any manner.” • As a result, a number of loan and investment companies registered under the Companies act by business houses for the purpose of investment in group companies are now included as NBFCs. CATEGORIES 1. 2. 3. 4. 5. 6. 7. 8. Equipment Leasing Company (ELC) Hire-Purchase Finance Company (HPFC) Housing Finance Company (HFC) Investment Company (IC) Loan Company (LC) Mutual Benefit Financial Company (MBFC) Miscellaneous Non-Banking Company (MNBC) Residuary Non-Banking Company (RNBC) IMPORTANCE • NBFCs perform a diverse range of functions and helps bridge the credit gaps. • They have served the households, farm,...
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...A Synopsis On “COMPARATIVE STUDY OF NBFC AND ITS ROLE IN INDIAN ECONOMY” Submitted To: Submitted By: Dr. Kavita Chavali AARLA SIREESHA 10SBCMO125 FINANCE C Bangalore ALLIANCE UNIVERSITY SCHOOL OF BUSINESS Page 1 INTRODUCTION Non-banking Financial Institutions carry out financing activities but their resources are not directly obtained from the savers as debt. Instead, these Institutions mobilize the public savings for rendering other financial services including investment. All such Institutions are financial intermediaries and when they lend, they are known as Non-Banking Financial Intermediaries (NBFIs) or Investment Institutions. Apart from these NBFIs, another part of Indian financial system consists of a large number of privately owned, decentralized, and relatively small-sized financial intermediaries. Most work in different, miniscule niches and make the market more broad-based and competitive. While some of them restrict themselves to fund-based business, many others provide financial services of various types. The entities of the former type are termed as "non-bank financial companies (nbfcs)". A robust banking and financial sector is critical for activating the economy and facilitating higher economic growth. Financial intermediaries like NBFCs have a definite and very important role in the financial sector, particularly in a developing economy like India. They are a vital link in the...
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...up to about 26 lakh crore in assets (2008-09-FSAP). According to The Financial Development index-2008, India scores better in Financial intermediation through Non-Banks ranking 16th, compared to a rank of 50th in terms of Banks. India ranks better in terms of capital access comparable to Japan, in spite of much lower assets/GDP comparatively. Classification of Financial institutions The Financial institutions in India can be broadly classified into the categories as listed in the representation below: The Distribution of Assets among the various Financial institutions in India The major share in the assets is that of the Commercial banks and then closely followed by NBFC, and Mutual funds which together account for about 20 % of the assets. What is a Non-Banking Financial Company (NBFC)? Non Banking Finance Institutions is a constituent of the institutional structure of...
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...RBI’s Consultation paper- Peer to Peer Lending in India The Reserve Bank of India (RBI) has initiated steps to regulate peer-to-peer (P2P) lending business. RBI has proposed registering P2P lending platforms as non-banking financial companies (NBFCs). In order to come up with the regulation RBI has sought suggestions over the consultation paper. We have analysed the proposed regulatory framework and submit our comments /suggestions. We request the RBI to give us an opportunity to present our views at appropriate forum or panel if they deem fit to substantiate our views. Clause No. Comments/suggestions Clause 5.1- Proposal P2P platforms are online market place and acts merely as a to bring P2P lending platform/intermediary between lender and borrower to facilitate platforms under the transaction through its technological integration. These definition of NBFCs platforms neither accept deposits on their balance sheets nor do under section 45I (f) they engage in proprietary lending. There activity should not be (iii) of the RBI Act termed as ‘financial’ per se. P2P platforms are non-banking and non-financial companies and therefore the proposal or need to bring them under the definition of NBFCs under section 45 I (f) (iii) may kindly be reviewed. Clause 5.2- RBI to Online platform is only a market place facilitating the sale of issue registration financial products and do not accept any deposit from public. requirement...
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...The scope of present study is confined to critically examine the HR Challenges of Non Banking Financial Companies with a special reference to the Gold Loan Companies This study is significant for several reasons. First, This study confirmed that factors such as internal communication, organizational structure, political climate, professional development opportunities, promotional opportunities, and regard for personal concerns had a significant impact on the performance of the employees working in NBFCs because they are affected with many variables such as organizational policies, personnel policies particularly rewards and promotions, leadership style etc. OBJECTIVES OF THE STUDY 1. To identify and understand the HR practices followed by the Gold Loan NBFCs. 2. To Study the HR Challenges in Gold Loan NBFCs. 3. To Study the HR Challenges if Gold Loan NBFCs and its direct impacts in People Management. HYPOTHESIS: H1: Human Resource Practices has direct relationship with the overall performance of the company. H2: Companies performance has direct relationship with the Human Resources...
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...Table of Contents EXECUTIVE SUMMARY ..................................................................... 3 CHAPTER-1 INTRODUCTION ................................................................ 4 1.1 Types Of NBFC‘s ...................................................................................... 5 1.2 Regulations of NBFC‘s ............................................................................... 6 1.3 Guidelines for new deposits ........................................................................ 8 1.4 Responsibilities .......................................................................................... 11 1.5 Current Scenario ....................................................................................... 12 CHAPTER-2 Literature review ....................................................................................... 14 2.1 Importance Of NBFC‘s .............................................................................. 15 2.2 Role of NBFC‘s ... ................................................................................. 16 2.3 On Global Crisis .................... .............................................................. 17 CHAPTER-3 RESEARCH METHODOLOGY ............................................................. 18 3.1 RESEARCH DESIGN ...............................
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...interviewers give very little information in the beginning of the case and want you to probe for information. Some others however give a lot of information to see how you handle such enormous quantities of data. This case belongs to the latter category.) The year is 2000. The case we are about to discuss today is based on the financial services industry in India. Before I tell you about our client, I am going to give you some information about the industry structure. The industry has 2 sub-segments: Commercial Banks and NBFCs, which stands for Non Banking Finance Companies (the idea is to throw some complex sounding acronyms to see how the candidate handles it). Both these segments are highly regulated by the banking regulator but the key differences between the two segments are as follows: Commercial banks are typically national players whereas NBFCs are regional players the reason being that the former is a scale business NBFCs are not allowed by the banking regulator to offer an important product called checking accounts (or current accounts as it is called in certain countries) to their customers. Before I explain what that this product is tell me if you know the difference between an asset and a liability product for a bank is (candidates who are not familiar with the banking industry should not be afraid to ask the difference - this is a test to see if the candidate asks questions or just assumes things sometimes incorrectly). An asset...
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...services, automotive dealerships, hospitality, real estate, entertainment, health services and alternate energy. ------------------------------------------------- Financial Services[edit] Muthoot Fincorp Ltd. is one of the largest non-banking financial companies (NFBC) in India[citation needed], registered with the Reserve Bank of India (RBI). Muthoot Fincorp is a provider of mass finance in the form of gold loans. The company has a diverse mix of retail offerings including loan products, money transfer, roreign Exchange, insurance services and wealth management services. The net worth of Muthoot Fincorp as on 31 March 2014 was Rs. 1249.85 crores and the capital adequacy ratio of the company was 21.01%.[1] Muthoot Capital Services[edit] An NBFC listed on the Bombay Stock Exchange, MCSL offers loans for the purchase of vehicles.. The company is licensed by RBI to accept deposits and offers deposit products. MCSL is active in retail financing and works with borrowers in rural and semi-urban areas. The company offers two wheeler and three wheeler loans and services more than 1,300 dealerships in seven states, with Hero and Honda contributing 80% of the total business.[2] Muthoot Housing Finance Company[edit] Three years back the group entered the affordable housing finance arena through a subsidiary – Muthoot Housing Finance Company Ltd (MHFL). MHFL caters mainly to the housing finance requirements of customers in the middle and lower income category.[3] Muthoot Mahila Mitra[edit] ...
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