NBFCs Classification in India

NBFCs Classification in India

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NBFCs or, Non-Banking Financial Corporations in India NBFCs or, Non-Banking Financial Corporations in India

1. IC or, Investment Company is any business that engages in the procurement of securities as its primary line of business and is classified as a financial institution.

2. AFC, or asset finance company is a business that engages in the funding of tangible assets that support productive or economic activity, such as cars, tractors, lathes, generators, earthmoving and material handling equipment, self-propelled vehicles, and general-purpose industrial machines. For this purpose, the term "principal business" refers to the financing of real or tangible assets that support economic activity and the income derived from such assets that accounts for at least 60% of total assets and income, respectively.

3. IFC, or Infrastructure Finance Company is a non-banking finance business that:

a) Invests at least 75% of its total assets in infrastructure loans

b) Has a minimum of Rs 300 crore in net owned funds

c) Has a minimum credit rating of "A" or equivalent; and d) has a CRAR of 15%

4. The term "LC" or "Loan Company" refers to any financial institution that conducts its primary business of providing financing, whether through the granting of loans or advances or in another way, for any activity other than its own. Asset finance companies are not included in this definition.

5. IDF-NBFC, also known as the Infrastructure Debt Fund is a business registered as an NBFC with the purpose of facilitating the flow of long-term loans into infrastructure projects. Funds are raised by IDF-NBFC through the issuance of bonds containing minimum maturity of 5-years denominated within dollars or, rupees. IDF-NBFCs may only be sponsored by Infrastructure Finance Companies (IFC).

6. CIC-ND-SI, also known as a Systemically Important Core Investment Company is an NBFC that engages in the business of stock and security purchase.

7. NBFC-MFI or, Non-Banking Financial Entity - Micro Finance Institution is an NBFC which does not take deposits and possesses a minimum of 85% assets as qualifying assets meeting these requirements:

• Loan disbursed by an NBFC-MFI to a borrower with a household income annually of not exceeding Rs. 1,00,000 in a rural dwellers household or Rs. 1,60,000 in an urban or semi-urban household

• Loan amount not to exceed Rs. 50,000 in the first cycle and Rs. 1,00,000 in subsequent cycles;

• Total amount of Borrower's Debt not to Exceed Rs. 1,00,000; Loan tenure not to be less than 24 months for Loan amount over Rs. 15,000

• The total amount of loans made by MFIs for the purpose of generating income must equal at least 50% of all loans made overall.

• The borrower may choose to repay the loan in weekly, fortnightly, or monthly installments.

8. Mortgage Guarantee Companies, or MGCs are financial organisations with net owned funds of at least Rs. 100 crores and mortgage guarantee activity that accounts for at least 90% of company turnover or at least 90% of gross income.

9. Non-Banking Financial Corporation - Factors, often known as NBFC-Factors: NBFC-Factor 9. Non-Banking Financial Corporation - Factors, often known as NBFC-Factors: NBFC-Factor

10. Promoter / promoter groups may establish a new bank using a financial organisation called NOFHC or NBFC, or Non-Operative Financial Holding Corporation. It is a wholly-owned Non-Operative Financial Holding Company (NOFHC), and to the degree permitted by the relevant regulatory requirements, it will hold the bank as well as all other financial services entities that are RBI-regulated or, by other regulators.