Types of Non Banking Financial Institutions with Examples in Detail
The following are some examples of non banking financial companies:
Asset Finance Company (AFC)
- An AFC is an organisation that conducts the financing of tangible assets as its primary business.
- For the purposes of this definition, a company’s principal business is any operation that generates at least 60% of its total assets and income from financing tangible assets that support economic activity.
Investment Company (IC)
Any business that engages in the acquisition of securities as its primary business and is a financial institution is referred to as an IC.
Loan Company (LC)
LC refers to any company that is a financial institution and conducts the provision of finance as its primary business. This includes making loans, advances, and other types of financial commitments for activities other than its own.
Infrastructure Finance Company (IFC)
IFC is a non-banking finance business that:
- invests at least 75% of its total assets in infrastructure loans;
- has a minimum of Rs 300 crore in net owned funds;
- has a minimum credit rating of “A” or similar;
- has a CRAR of 15%.
Systemically Important Core Investment Company (CIC-ND-SI)
A Core Investment Company (CIC) is a Non-Banking Financial Company (NBFC) that engages in the acquisition of shares and securities and invests at least 90% of its net assets.
Non-Banking Financial Company (IDF-NBFC)
- IDF-NBFC is a business that has been registered as an NBFC to make it easier for long-term funding to flow into infrastructure projects.
- IDF-NBFC raises funds by issuing bonds with a minimum 5-year maturity that are denominated in rupees or dollars.
- IDF-NBFCs may only be sponsored by Infrastructure Finance Companies (IFC).
Non-Banking Financial Company – Factors (NBFC-Factors)
NBFC-Factor is a non-deposit-taking NBFC with factoring as its main line of business. NBFC-Factor means a non-banking financial company that meets the Principal business criteria:
- whose financial assets in the factoring business constitute at least 75 percent of its total assets,
- has Net Owned Funds of Rs. 5 crore,
- has been granted a certificate of registration by the RBI under Section 3 of the Factoring Regulation Act, 2011.
Mortgage Guarantee Companies (MGC)
MGCs are financial organizations with a net owned fund of Rs 100 crore and a mortgage guarantee business that accounts for at least 90% of their business turnover or at least 90% of their gross income.
Also, check the Regulators of Banks & Financial Institutions in India Here.
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