Non-banking financial firms are companies who are registered under companies act of 1956 in India which comprise a significant segment of the financial system in India. NBFCs are financial intermediaries engaged primarily in the company of accepting deposits and bringing credit. They play an essential part in channelizing the scarce financial resources to capital creation.
Types of NBFC n India
There are three types of NBFC in India, and the significant difference between banks and NBFC are,
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** NBFC difference from banks**
- NBFC cannot accept demand deposits from Customers;
- They cannot be part of the payment & settlement systems like cheques and cards.
- Insurance facility of DICGC for Deposit is not available for NBFC like banks.
IDFC Bank which came into being in 2015 has lost 15.91 per cent since, while its parent IDFC gained 16.33 per cent. In the same period, Bajaj Finance, which failed to get a bank license, rose 265.48 per cent and Warburg Pincus-backed Capital First has doubled. “NBFCs are currently trading at the same price to book and price to earnings valuations as well-run private sector banks,” said Rashesh Shah, chairman, Edelweiss group, which lost out on the banking license. “They were earlier u. Source
Asset Finance Company: An AFC is a company with a principal business as the financing of physical assets supporting such as automobiles, tractors, Heavy vehicles and other industrial machines.
Few Asset Finance Companies in India
(i) TOYOTA FINANCIAL SERVICES INDIA LIMITED
(ii) Dhanlaxmi Motors Finance Pvt LtdInvestment Company: This type of NFBC is a financial institution with its principal business the acquisition of securities.
Few Investment Companies in India
(i) Bajaj Capital
(ii) Kotak Private Equity Group
(iii) D. S. P. Merrill LynchLoan Company: This kind of NBFC is a financial institution carrying on their business as providing loans and advances excluding Asset Finance.
Few Loan Companies in India
(i). Fullerton India Credit Company Limited
(ii). India Bulls Housing Finance Limited
(iii). IIFL FinanceInfrastructure Finance Company: In this financial institutions deploys 75 %for infrastructure loans; Net Owned Funds of Rs. 300Cr; RBI credit rating of A and Capital to Risk Assets Ratio (CRAR)of 15%.
Few Infrastructure Finance Companies in India
(i) L&T Infrastructure And Finance Company Ltd
(ii) India Infrastructure Finance Company Limited