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A PROJECT REPORT ON:

“A STUDY ON NON-BANKING FINANCE COMPANIES”

A PROJECT SUBMITTED TO:

UNIVERSITY OF MUMBAI FOR PARTIAL COMPLETION OF THE DEGREE OF


BACHELOR IN FINANCE & MARKET
UNDER THE FACULTY OF FINANCE & MARKETING

SUBMITTED BY: ZAID. S. KHAN (T.Y B.F.M)


UNDER THE GUIDANCE OF: PROF. ALINA DMELLO

DR. BABASAHEB AMBEDKAR SCIENCE & ADV. GURUNATH KULKARNI COMMERCE


MAHAVIDYALYA VASAI WEST PALGHAR 401202

ACADEMIC YEAR
2019 - 2020

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CERTIFICATE

THIS IS TO CERTIFY THAT ZAID KHAN WORKED AND DULY COMPLETED HIS PROJECT
WORK FOR THE DEGREE OF BACHELOR IN FINANCE & MARKETING UNDER THE
FACULTY OF FINANCE IN THE SUBJECT OF MARKETING

AND HIS PROJECT IS ENTITLED, “A STUDY ON NON-BANKING FINANCE COMPANIES”


UNDER MY SUPERVISION.

I FURTHER CERTIFY THAT THE ENTIRE WORK HAS BEEN DONE BY THE LEARNER UNDER
MY GUIDANCE AND THAT NO PART OF IT HAS BEEN SUBMITTED PREVIOUSLY FOR ANY
DEGREE OR DIPLOMA OF ANY UNIVERSITY.

IT IS HIS OWN WORK AND FACTS REPORTED BY HER/HIS PERSONAL FINDINGS AND
INVESTIGATIONS.

SIGN OF GUIDE SIGN OF EXAMINER

SIGN OF COORDINATOR SIGN OF PRINCIPAL

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DECLARATION:

I THE UNDERSIGNED MR. ZAID KHAN HERE BY,

DECLARE THAT THE WORK EMBODIED INTHIS PROJECT WORK TITLED “EFFECT OF
DIGITAL MARKETING ON YOUNGSTERS”, FORMS MY OWN CONTRIBUTION TO THE
RESEARCH WORK CARRIED OUT UNDER THE GUIDANCE OF PROF. ALINA DMELLO IS A
RESULT OF MY OWN RESEARCH WORK AND HAS NOT BEEN PREVIOUSLY SUBMITTED
TO ANY OTHER UNIVERSITY FOR ANY OTHER DEGREE/ DIPLOMA TO THIS OR ANY
OTHER UNIVERSITY.

WHEREVER REFERENCE HAS BEEN MADE TO PREVIOUS WORKS OF OTHERS, IT HAS


BEEN CLEARLY INDICATED AS SUCH AND INCLUDED IN THE BIBLIOGRAPHY.

I, HERE BY FURTHER DECLARE THAT ALL INFORMATION OF THIS DOCUMENT HAS BEEN
OBTAINED AND PRESENTED IN ACCORDANCE WITH ACADEMIC RULES AND ETHICAL
CONDUCT.

NAME AND SIGNATURE OF THE LEARNER

CERTIFIED BY

NAME AND SIGNATURE OF THE GUIDING TEACHER

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ACKNOWLEDGMENT

TO LIST WHO ALL HAVE HELPED ME IS DIFFICULT BECAUSE THEY ARE SO NUMEROUS
AND THE DEPTH IS SO ENORMOUS.

I WOULD LIKE TO ACKNOWLEDGE THE FOLLOWING AS BEING IDEALISTIC CHANNELS


AND FRESH DIMENSIONS IN THE COMPLETION OF THIS PROJECT.

I TAKE THIS OPPORTUNITY TO THANK THE UNIVERSITY OF MUMBAI FOR GIVING ME


CHANCE TO DO THIS PROJECT.

I WOULD LIKE TO THANK MY PRINCIPALDR. Y.K. THOMBARE AND VICE PRINCIPAL S.M
SHAIKH SIR FOR PROVIDING THE NECESSARY FACILITIES REQUIRED FOR COMPLETION
OF THIS PROJECT.

I TAKE THIS OPPORTUNITY TO THANK OUR COORDINATOR DR. ADIL SIDDIQUI FOR
MORAL SUPPORT AND GUIDANCE.

I WOULD ALSO LIKE TO EXPRESS MY SINCERE GRATITUDE TOWARDS MY PROJECT


GUIDE PROF. ALINA DMELLO WHOSE GUIDANCE AND CARE MADE THE PROJECT
SUCCESSFUL.

I WOULD LIKE TO THANK MY COLLEGE LIBRARY, FOR HAVING PROVIDED VARIOUS


REFERENCE BOOKS AND MAGAZINES RELATED TO MY PROJECT.

LASTLY, I WOULD LIKE TO THANK EACH AND EVERY PERSON WHO DIRECTLY OR
INDIRECTLY HELPED ME IN THE COMPLETION OF THE PROJECT ESPECIALLY MY
PARENTS AND PEERS WHO SUPPORTED ME THROUGHOUT MY PROJECT.

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INTRODUCTION

A Non-banking financial companies (NBFCs) are financial institutions that offer various banking services
but do not have a banking license. Generally, these institutions are not allowed to take traditional demand
deposits readily available funds, such as those in checking or savings accounts from the public. This
limitation keeps them outside the scope of conventional oversight from federal and state financial
regulators.

NBFCs (Non-bank financial companies) play a very vital role in participating in the development of an
economy by providing a fillip to transportation, employment generation, wealth creation, bank credit in
rural segments and to support financially weaker sections of the society. NBFCs are financial
intermediaries engaged in the business of accepting deposits delivering credit and play an important role
in channelizing the scarce financial resources to capital formation. In India, despite being different from
banks, NBFC are bound by the Indian banking industry rules and regulations. Present paper aims at
studying the financial performance of NBFCs and its comparison with previous years. Financial
performance of NBFCs has been studied from different parameters ie expenses, incomes, taxes, profits,
assets etc.

 Non-banking financial companies (NBFCs) are entities or institutions that provide certain bank-
like and financial services but do not hold a banking license.

 NBFCs are not subject to the banking regulations and oversight by federal and state authorities
adhered to by traditional banks.

 Investment banks, mortgage lenders, money market funds, insurance companies, hedge funds,
private equity funds, and P2P lenders are all examples of NBFCs.


 Since the Great Recession, NBFCs have proliferated in number and type, playing a key role in
meeting the credit demand unmet by traditional banks.

 These companies provide finance to customers for gains of profits to run the business, without
being a banking firm.

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The different types of NBFCs are as follows:

 Asset Finance Company (AFC) : An AFC is a company which is a financial institution carrying
on as its principal business the financing of physical assets supporting productive/economic
activity, such as automobiles, tractors, lathe machines, generator sets, earth moving and material
handling equipments, moving on own power and general purpose industrial machines. Principal
business for this purpose is defined as aggregate of financing real/physical assets supporting
economic activity and income arising there from is not less than 60% of its total assets and total
income respectively.

 Investment Company (IC) : IC means any company which is a financial institution carrying on
as its principal business the acquisition of securities Those who want to start a
Private Equity Business or Venture Capital Fund, using the and were subject to the NBFC
regulations. This pose darily held investments in and/or granted loans to group deposits.

 Loan Company (LC): LC means any company which is a financial institution carrying on as its
principal business the providing of finance whether by making loans or advances or otherwise for
any activity other than its own but does not include an Asset Finance Company.

 Infrastructure Debt Fund: Non- Banking Financial Company (IDF-NBFC): IDF-NBFC is a


company registered as NBFC to facilitate the flow of long term debt into infrastructure projects.
IDF-NBFC raise resources through issue of Rupee or Dollar denominated bonds of minimum 5
year maturity. Only Infrastructure Finance Companies (IFC) can sponsor IDF-NBFCs.

 Mortgage Guarantee Companies (MGC) - MGC are financial institutions for which at least
90% of the business turnover is mortgage guarantee business or at least 90% of the gross income
is from mortgage guarantee business and net owned fund is Rs 100 crore.

 Chit Fund Companies - chit fund company is the one which manages, conducts or supervises, as
foremen, agent or in any other capacity, chits as defined in Section 2 of the Chit Funds Act, 1982

 Mutual Fund Benefit Companies - A mutual fund is a type of financial vehicle made up of a
pool of money collected from many investors to invest in securities like stocks, bonds, money
market instruments, and other assets. Mutual funds are operated by professional money managers
who allocate the fund's assets and attempt to produce capital gains.

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NBFCS supplement the role of the banking sector in meeting the increasing financial need of the
corporate sector, delivering credit to the unorganized Sector and to small local borrowers

NBFCS have more flexible structure than banks. As decisions, assume greater risks and tailor-compared
to banks. They take quick make the in services and charge according to the needs of the clients.

Their flexible structure helps in broadening the market by providing the saver and investor a bundle of
services on a competitive basis.

Non Banking Finance Companies (NBFCS) are a constituent of the institutional structure of the organized
financial system in India.

The Financial System of any Country consists of financial markets, financial intermediation and financial
instruments or financial products.

All these Items facilitate transfer of funds and are not always mutually exclusive. Inter-relationships
Between these are parts of the system e.g. Financial Institutions operate in financial markets.

NBFCS at present providing financial services partly fee based and partly fund based. Their fee based
services include portfolio management, issue management. Loan syndication, merger and acquisition.
Credit rating etc. Their asset based activities include venture capital financing, housing finance,
equipment leasing hire purchase financing factoring etc. In short they are now providing variety of
services NBFCS differ widely in their ownership.

NBFCS provide financial services like hire-purchase, leasing, loans, investments,


chit-fund companies etc companies and non-deposit accepting companies. NBFCS are small in size and
they offer attractive owned privately. The NBFCS have grown rapidly since 1990
rate of return. They are fund based as well as service oriented companies. Their main companies are
banks and financial institutions. According to RBI Act 1934, it is compulsory to register the NBFCS with
the Reserve Bank of India.

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NBFC BACKGROUND

The Reserve Bank of India Act 1934 was amended on 1st December 1964 by The Reserve Bank Of India
Amendment Act 1963 to include provisions relating to non-banking institutions receiving deposits and
financial institutions. It was observed that the existing legislative and regulatory framework required
further refinement and improvement because of rising number of defaulting NBFC`s and the need for an
efficient and quick system fir Redressal of Greivances of individual depositors.

The recent years, NBFC had quite a spotlight but it wasn't so when the story started At one point in its
history, it contributed one sixth of the global outstanding credit, and thus was potentially seen as a
systematic risk to the financial sector as a whole In India, starting its legislative journey under the tutelage
of Reserve bank of India as early as 1964, the Chapter III B which was first
introduced with motive to regulate 'deposit accepting' NBFCs in 1963, under the Reserve Bank
Amendment Act went through many innovations and committees appointed by Governors of RBI over
the year From the James S Raj Committee of 1974 which successfully banned chit fund schemes to the
Chakravarty Committee that assessed and recommended links between banks and NBFC in terms of
their impact on the economy and the credit system in 1982.

The Working Group on Financial Companies constituted in April 1992 i.e. the Shah Committee set out
the agenda for reforms in the NBFC sector. This committee made wide ranging recommendations
covering, inter-alia entry point norms, compulsory registration of large sized NBFCS, prescription of
prudential norms for NBFCS on the lines of banks, stipulation of credit rating for acceptance of public
deposits and more statutory powers to Reserve Bank for better regulation of NBFCS.

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NON-BANKING FINANCIAL COMPANY (NBFC)
*DESCRIPTION*

Non-Banking Financial Companies (NBFCS) play a vital role in the context of Indian Economy. They are
indispensible part in the Indian financial system because they supplement the activities of banks in terms
of deposit mobilization and lending.

They play a very important role by providing finance to activities which are not served by the organized
banking sector. So, most the committees, appointed to investigate into the activities, have recognized their
role and have recognized the need for a well-established and healthy non-banking financial sector.

Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 and is
engaged in the business of loans and advances, acquisition of shares/stock/bonds/debentures/securities
issued by Government or local authority or other securities of like marketable nature, leasing, hire-
purchase, insurance business, chit business but does not include any institution whose principal business
is that activity, industrial of agriculture activity, sale/purchase/construction of immovable property.

Non-banking institution which is a company and which has its principal business
of receiving deposits under any scheme of arrangement or any other manner,
or lending in any manner is also a non- banking financial company.

*DEFINITION*

A non-banking institution, which is a company and which has its principal

(i) Business the receiving of deposits under any scheme or lending in any manner.
(ii) Such other non-banking institutions, as the bank may with the previous approval of the central
government and by notification in the official gazette, specify.

NBFCS provide a range of services such as hire purchase finance, equipment lease finance, loans, and
investments.

NBFCS have raised large amount of resources through deposits from public, shareholders, directors, and
other companies and borrowing by issue of non-convertible debentures, and so on.

Non-banking Financial Institutions carry out financing activities but their resources are not directly
obtained from the savers as debt. Instead, these Institutions mobilize the public savings for rendering
other financial services including investment.

All such Institutions are financial intermediaries and when they lend, they are known as Non-Banking
Financial Intermediaries (NBFIS)

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SOME OF THE NON-BANKING FINANCE COMPANIES IN INDIA

Power Finance Corporation Limited

TOTAL INCOME : (267377.40 mn)

Power Finance Corporation Limited was founded in 1986 and is a Navratna Status company. Power
Finance Corporation Limited is known to provide financial assistance to different power projects in the
country. It supports organizations involved in Power generation, transmission and distribution. The
company is also listed in National Stock Exchange (NSE) and Bombay Stock Exchange (BSE).

Bajaj Finance Limited

TOTAL INCOME : (133292.20mn)

Bajaj Finance was founded in 2007 and is a unit of Bajaj Holdings and Investments. It offers loans to
doctors for career enhancement, home loans, gold loans, individual Loans, business and entrepreneur
loans and is an extremely popular finance company. Apart from these, Bajaj Finserv also provides
services like wealth advisory, lending money and general insurance. It has over 1400 branches across the
country with more than 20000 employees.

Mahindra & Mahindra Financial Services Limited


TOTAL INCOME : (72061.20mn)

Mahindra & Mahindra Financial Services Limited (MMFSL) was established in 1991 and has over 1000
branches, and a customer base of over 3 million, all over the country. MMFSL is one of the most
renowned organizations and has two affiliates offering Insurance services and rural housing financial
services. It also specializes in offering gold advances, vehicle advances, corporate advances, home
credits, working capital advances and much more.

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Muthoot Finance Ltd

TOTAL INCOME : (3980.85mn)

Muthoot Finance Ltd is India’s first NBFC tracing its history back to 1888, when it began as a small
lender from a village in Kerala. Muthoot Finance Ltd sanctions loans only against pledge of gold
ornaments. It is a leader in India’s gold loan and finance market. Besides financing gold
transactions, Muthoot Finance Ltd offers foreign exchange services, money transfers, wealth management
services, travel and tourism services. Gold coins are also sold at Muthoot Finance Branches. The
company has its headquarters in Kerala, India, and operates over 4,400 branches throughout the country.
It is also the parent company of Muthoot Housing Finance (India) Ltd, which offers home loans.

Shriram Transport Finance Company Limited

TOTAL INCOME : (122768.30 mn)

Transport Finance Company Limited focuses on funding commercial and business vehicles, besides
others. The company was founded in 1979 and has been offering funding services for Light Duty Trucks,
Heavy Duty Trucks, Mini Trucks, Passenger Vehicles, Construction Vehicles and Farm Equipments. The
company’s specialization is in general insurance, mutual funds, common assets, stock broking and
general protection.

Tata Capital Financial Services Limited

TOTAL INCOME : (23934.40 mn)

Tata Capital Financial Services Limited is top of India’s leading NBFCs. Established in 2007, it is a
subsidiary of Tata Sons Limited. TCFS describes itseld as a one-stop financial service provider that caters
to the diverse needs of retail, corporate and institutional customers across businesses. It is registered with
RBI as ‘Systemically Important Non-Deposit Accepting Non-Banking Financial Company (NBFC)’.
Among the various products offered by TCFS to individuals, families and businesses, are commercial
finance, infrastructure finance, wealth management, consumer loans and distribution and marketing of
Tata Cards.

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L&T Infrastructure Finance Company Ltd

TOTAL INCOME : (27344.15mn)

L & T Finance Limited is a strong player in the non banking financial sector and was established in 1994.
Headquartered in Mumbai, L & T offers funding services to different sectors like trade, industry,
agriculture, Commercial Vehicle loans, Individual Vehicle loans, and corporate and rural loans. The
company caters to more than 10 lakh people. In 2010, L & T was awarded the “Company of the year” in
the Economic Times awards.

Aditya Birla Finance Ltd.

TOTAL INCOME : (44800.00 mn)

Aditya Birla Finance Limited, a part of the Aditya Birla Financial Services, was incorporated in 1991 and
is an ISO 9001:2008 certified NBFC. ABFL is registered with RBI as a ‘systemically important non-
deposit accepting NBFC’ and it ranks among the top five largest private diversified NBFCs in India. It
offers precise and customised solutions across a wide range, from corporate finance to commercial
mortgage, and from capital markets to structured finance. .

HDB Finance Services

TOTAL INCOME : (70619.90 mn)

HDB Financial Services is operated by India’s largest private sector HDFC Bank. It offers a variety of
secured and non-secured financial loans through a network of more than 1,000 branches in 22 Indian
states and 3 Union Territories. It provides secured and unsecured loans, including personal and business
loans, doctor's loans, auto loans, gold loans, new to credit loans, enterprise business loans, consumer
durables loans, construction equipment loans, new and used car loans, equipment loans, and tractor loans.
The company operates through Lending Business and BPO Services segments. It is considered the fastest
growing NBFC in India today.

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Factors contributing to the Growth of NBFCS :

According to A.C. Shah Committee, a number of factors have contributed to the growth of NBFCS.
Comprehensive regulation of the banking system and absence or relatively lower degree of regulation
over NBFCS has been one of the main reasons for their growth. During recent years regulation over their
activities has been strengthened, as see a little later.

The merit of non-banking finance companies lies in the higher level of their customer orientation. They
involve lesser pre or post-sanction requirements, their services are marked with simplicity and speed and
they provide tailor-made services to their clients.

NBFCS cater to the needs of those borrowers who remain outside the purview of the commercial banks as
a result of the monetary and credit policy of RBI. In addition, marginally higher rates of interest on
deposits offered by NBFCS also attract a large number of depositors Regulation of NBFCS

In 1960s, the Reserve Bank made an attempt to regulate NBFCS by issuing directions to the maximum
amount of deposits, the period of deposits and rate of interest they could offer on the deposits accepted.

Norms were laid down regarding maintenance of certain percentage of liquid assets, creation of reserve
funds, and transfer thereto every year a certain percentage of profit, and so on. These directions and
norms were revised and amended from time to time.

In 1997, the RBI Act was amended and the Reserve Bank was given comprehensive powers to regulate
NBFCS. The amended Act made it mandatory for every NBFC to obtain a certificate of registration and
have minimum net owned funds. Ceilings were prescribed for acceptance of deposits

Ceilings were prescribed for acceptance of deposits, capital adequacy, credit rating and net-owned funds.
T he Reserve Bank also developed a comprehensive system to supervise NBFCS accepting/ holding
public deposits.

Directions were also issued to the statutory auditors to report non-compliance with the RBI Act and
regulations to the RBI, Board of Directors and shareholders of the NBFCS.

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50-50 criteria

RBI vide its press release 1998-99/1269 dated April 8, 19995, laid down the criteria for determining the
principality of business (popularly known as 50-50 principal business criteria). The asset and income
pattern as evidenced from the last audited balance sheet of the company shall be considered. The
following criteria shall be satisfied by a company to be known as an NBFC –

* Financial assets are more than 50 per cent of its total assets (netted off by intangible assets) and
* Income from financial assets should be more than 50 per cent of the gross income.

The aforementioned criteria is a thumb rule for determining whether a company qualifies to be an NBFC.
The conditions are cumulative, that is, both the tests are required to be satisfied simultaneously as the
determinant factor for principal business of a company.

Based on the above press release, the RBI came with another circular no. DNBS (PD) C.C. No.
81/03.05.002/2006-07 dated October 18, 20066, insisting NBFCs to obtain an annual certificate from the
auditor of the company certifying that the company continues to carry on the business of NBFI and is
fulfilling the criteria of the principal business as detailed in the press release dated April 8, 1999.

Banks vs. NBFCs

NBFCs activities are akin to that of Banks. However, below mentioned are few differences :

 NBFC cannot accept demand deposits;

 NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn
on itself;

 Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not
available to depositors of NBFCs, unlike in case of banks;

 NBFCs do not have power under SARFAESI;

 100 per cent FDI in NBFCs is allowed under the automatic route in 18 specified activities, subject
to minimum capitalization norms;

 74 per cent (incl. investment by FIIs/ FPIs) FDI permitted in private sector - banking, 49 percent
under automatic route and beyond 49 per cent and up to 74 per cent under approval route.

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NBFCs: Review of Literature

 Jafor Ali Akhan (2010) writes on “Non-Banking Financial Companies (NBFCs) in India”.
The book discussed the financial system in India. It covers the financial intermediaries including
commercial banks, regional rural banks, cooperative banks and Non-Banking Financial
Companies in India. The book is good source in getting information on businesses, classification,
management of assets, risk coverage, etc of the NBFCs in India.
 Shailendra Bhushan Sharma and Lokesh Goel (2012) write on “Functioning and Reforms in
Non-Banking Financial Companies in India”. Non-Banking Financial Companies do offer all
sorts of banking services, such as loans and credit facilities, retirement planning, money markets,
underwriting and merger activities. These companies play an important role in providing credit to
the unorganized sector and to the small borrowers at the local level. Hire purchase finance is by
far the largest activity of NBFCs. The rapid growth of NBFCs has led to a gradual blurring of
dividing lines between banks and NBFCs, with the exception of the exclusive privilege that
commercial banks exercise in the issuance of cheques. This paper provides an exhaustive account
of the functioning of and recent reforms pertaining to NBFCs in India.
 Subina Syal and Menka Goswami (2012) writes on “Financial Evaluation of Non-Banking
Financial Institutions: An Insight”in ‘Indian Journal of Applied Research’. The Indian
financial system consists of the various financial institutions, financial instruments and the
financial markets that facilitate and ensure effective channelization of payment and credit of funds
from the potential investors of the economy. Non-banking financial institutions in India are one of
the major stakeholders of financial system and cater to the diversified needs by providing
specialized financial services like investment advisory, leasing, asset management, etc. Non-
banking financial sector in India has been a considerable growth in the recent years. The aim of
the present study is to analyze the financial performance and growth of non-banking financial
institutions in India in the last 5 years. The study is helpful for the potential investors to get the
knowledge about the financial performance of the non-banking financial institutions and be
helpful in taking effective long-term investment decisions.
 Sornaganesh and Maria Navis Soris17 (2013) B “A Fundamental Analysis of NBFCs in
India” in ‘Outreach’. The study was made to analyze the performance of five NBFCs in India.
The annual reports of these companies are evaluated so as to ascertain investments, loans
disbursed, growth, return, risk, etc. To sum up, the study is concluded that the NBFCs are earning
good margins on all the loans and their financial efficiency is good. Taxmann’s (2013) published
“Statutory Guide for Non-Banking Financial Companies” is published by Taxmann’s
Publications, New Delhi. The book listed the laws relating to Non-Banking Financial Companies.

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The rules and laws governing the kinds of businesses undertaken by different types of NBFCs are
also discussed.

 Amit Kumar and Anshika Agarwal (2014) published a paper entitled “Latest Trends in Non-
banking Financial Institutions” in ‘Academicia: An International Multidisciplinary Research
Journal’. In Indian Economy, there are two major Financial Institutions, one is banking and other
is Non-Banking. The Non-Banking Financial Institutions plays an important role in our economy
as they provide financial services on wide range, they also work to offer enhanced equity and risk-
based products, along with this they also provide short to long term finance to different sectors of
the economy, and many other functions. This paper examines the latest trends in Non-Banking
Financial Institutions. This paper analyzes the growth and enhanced prosperity of financial
institutions in India.

 Dash Saroj K (2014) writes on “Housing Loan Disbursement in India: Suggestive Metrics to
Prevent Bad | Debts” in ‘International Journal of Management, IT and Engineering’. Non-
Banking Financial Corporation (NBFC) in each of the countries involved in the business of
lending mortgage loans took stock of their policies and terms & conditions while disbursement of
loans. Critics and some experts might argue that given the technologically advanced systems in
place to do credit scoring, it is enough to have certain set of quantitative parameters to do a check.
The parameters, which are discussed in the credit scoring software, are primarily quantitative
parameters and some qualitative features whose measurements are also quantified.

 Naresh Makhijani (2014) writes on “Non-Banking Finance Companies: Time to Introspect”


in ‘Analytique’. Over the last few years the Non Banking Finance Companies (NBFC) sector has
gained significant advantages over the banking system in supplying credit under-served and
unbanked areas given their reach and niche business model. However, off late the Reserve Bank
of India has introduced and suggested various changes in the existing regulatory norms governing
NBFCs with a view to bring NBFCs regulations at par with the banks. The ongoing and proposed
regulatory changes for the NBFCs in terms of increased capital adequacy, tougher provision
norms, removal from priority sector status and changes in securitization guidelines could bring
down the profitability and growth of the NBFC sector. NBFCs will need to introspect and rethink
their business models as they will now not only have to combat stringent regulatory norms but
also have to face the challenge of rising cost of funds, scare capital and direct competition from
banks.

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 Ravi Puliani and Mahesh Puliani (2014) writes a book entitled “Manual of Non-Banking
Financial Companies”. The book discussed the glossary of terms that are used in banking
operations and non-banking activities. The book covers the circulars and directions issued by
Reserve Bank of India from time to time to control, manage and regulate the business of NBFCs.

 Shail Shakya (2014) published a working paper entitled “Regulation of Non-banking Financial
Companies in India: Some Visions & Revisions”. Non-Banking Financial Companies are
pioneer in their cash deployment, accessibility to the markets and others to count. NBFCs are
known for their higher risk taking capacity than the banks. Despite being an institution of
attraction for the investors, NBFCs have played a significant role in the financial system. Many
specialized services such as factoring, venture capital finance, and financing road transport were
championed by these institutions. NBFC sector has more significantly seen a fair degree of
consolidation, leading to the emergence of large companies with diversified activities. However,
the recent financial crisis has highlighted the importance of widening the focus of NBFC
regulations to take particular account of risks arising from the regulatory gaps, from arbitrage
opportunities and from inter-connectedness of various activities and entities associated with the
financial system. The regulatory regime is lighter and different than the banks. The steady
increase in bank credit to NBFCs over the recent years means that the possibility of risks being
transferred from more lightly regulated NBFC sector to the banking sector in India can’t be ruled
out.

 Thilakam and Saravanan (2014) writes on “CAMEL Analysis of NBFCs in Tamil Nadu” in
‘International Journal of Business and Administration Research Review’. Financial intermediation
is a crucial function of Banks, Non Banking financial companies (NBFCs) and Development
Financial Institutions (DFIs) the post reform period in India is characterized by phenomenal
growth of NBFCs complementing the role of banks in mobilizing funds and making it available
for investment purposes. During the last decade NBFCs have undergone wide volatility and
change as an industry and have been witnessing considerable business upheaval over the last
decade because of market dynamics, public sentiments and regulatory environment. To evaluate
the soundness of NBFCs in Tamil Nadu over a decade, the authors made an attempt of CAMEL
criteria for analysis of selected Companies. Based on findings the suggestions were offered to
overcome the difficulties face by selected NBFCs in their development.

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