An NBFC is a company registered under the Companies Act, 1956, engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by the Government or local authority, or other marketable securities.
- Regulated by the RBI within the framework of the RBI Act of 1934.
- The Reserve Bank of India does not guarantee the repayment of deposits by NBFCs.
Activities Allowed
- NBFCs are allowed to accept/renew public deposits for a minimum period of 12 months and a maximum period of 60 months.
Activities not allowed
- NBFCs cannot accept demand deposits.
- NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on themselves.
- The deposit insurance facility of the Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs.
Source: The Hindu