NBFC Full Form | What is the Full Form of NBFC

Here, you’ll get the solution of following NBFC related questions: what is the full form of NBFC, full form of NBFC in financial sector, NBFC full form in banking

Non-Banking Financial Companies

NBFC stands for Non-Banking Financial Companies.
It refers to financial institutions that provide banking services without having a banking license or without fulfilling the legal definition of a bank.
These institutions are incorporated or registered under the businesses Act, 1956 and do business as a non-banking financial organization as defined under Section 45-IA of the RBI Act, 1934.
An NBFC is especially engaged within the business of loans, acquisition of shares, stocks, bonds issued by the govt , insurance business, chit fund business, and more.
A corporation whose main business is said to agriculture activity, industrial activity, sale, purchase/construction of immovable property can't be an NBFC.
The major difference between NBFC and bank is that in a Bank we will deposit money and withdraw it once we need it, but NBFC doesn't accept deposits and don't provide you the facility to withdraw money once you need it.
Deposits in NBFC aren't treated as savings they're basically future deposits or premiums, e.g., the premium you buy your LIC policy, insurance policy, etc.

Examples of NBFC

Insurance companies which are regulated by IRDA
Merchant Banking companies, stockbroking companies, risk capital fund which are regulated by SEBI
Housing finance companies, which are regulated by NHB (National Housing Bank)
Chit fund companies, which are defined in clause (b) of section 2 of the Chit Funds Act, 1982, and are regulated by the government
Nidhi companies, which are notified under section 620A of the businesses Act, 1956, and are regulated by the company ministry.

A company registered under the businesses Act, 1956 and willing to start out a business of non-banking financial organization as defined under Section 45 IA of the RBI Act, 1934 is required to fulfil the following conditions:

It should be registered under Section 3 of the businesses Act, 1956.
It should own a minimum net fund of Rs. 2 crore. However, the need of minimum net owned fund for specialized NBFCs could also be different.