NBFC ESSENTIALS WWW.WEBSOFTEX.COM
NON BANKING FIRMS • Non-banking money firms (NBFCs) are quick rising as a vital section of Indian national economy.
NON BANKING FIRMS • It's Associate in Nursing heterogeneous cluster of establishments (other than business and co-operative banks) performing arts money intervention in an exceedingly style of ways in which, like accretive deposits, creating loans and advances, leasing, rent purchase, etc.
NON BANKING FIRMS • They raise funds from the public, directly or indirectly, and lend them to final spenders. • They advance loans to the assorted wholesale and retail traders, smallscale industries and freelance persons.
NON BANKING FIRMS • Thus, they need broadened and varied the vary of product and services offered by a money sector. • Gradually, they're being recognized as complementary to the banking sector owing to their customeroriented services
NON BANKING FIRMS • simplified procedures • enticing rates of come back on deposits; flexibility and timeliness in meeting the credit wants of such that sectors
PROBLEMS FACED BY NBFC’S • One of the major issue faces by NBFC is lack of trust. • Although registration of NBFC is mandatory from RBI.
PROBLEMS FACED BY NBFC’S • But some institution gives false registration certificate and get involved in scams and make money out of people’s trust. • People tend to believe more in banks as they find it more trustworthy.
PROBLEMS FACED BY NBFC’S • Also recent scams in NBFC have snatched away the trust of common people from NBFC • In the same way Delhi police has unearthed the scam of 3 directors of Rs.980 crore.
PROBLEMS FACED BY NBFC’S • Fund raising has gradually become more difficult and challenging, specially, for the small and medium sized NBFCs. • NBFCs generally have no access to low cost funds.
PROBLEMS FACED BY NBFC’S • Banks can easily raise financial resources at low cost through deposits, savings and current accounts. • But being NBFC cannot raise capital through deposits it usually lack the availability of low cost funds.
PROBLEMS FACED BY NBFC’S • NBFC cannot recover small loans of less than Rs. 1 crore under the SARFAESI Act 2002. • Earlier there were no norms regarding NBFC in SARFAESI Act.
PROBLEMS FACED BY NBFC’S • But according to the recent amendment NBFC with asset base of Rs. 500 crore and above can be covered under act pertaining to cases of above 1 crore.