What are the NBFC Registration types prevalent in India

What are the NBFC Registration types
prevalent in India?

Every NBFC Registration, i.e. Non-Banking Financial Companies, is categorized into
the following types:

 Types of liabilities into Deposit and Non-Deposit accepting NBFC registrations
 Non-Deposit taking NBFCs: These NBFCs are categorized based on their sizes,

like NBFC-NDSI and NBFC-ND.
 Kind of activities they conduct
Because of this broad categorization of NBFC registrations, we have discussed various
RBI-approved NBFC registration models in India.

Types of NBFC Registrations

Asset Finance Company (ASF)

An AFC is a financial institution whose principal business is financing any business's
physical assets. An AFC does this by supporting economic activities, such as:

 Automobiles
 Tractors
 Lathe Machines
 Generator Sets
 Earth moving machines
 Material-handling equipment

These assets are purchased for moving its power and general-purpose industrial
machines.

Here, the principal business is the aggregate of financing real or physical assets
supporting economic activity. Such income must not be less than 60% of its total assets
and total income, respectively.

NBFC Registration: Investment Company (IC)

An Investment Company is a financial institution whose principal business is the
acquisition of securities.

Loan Company NBFC

A Loan Company refers to a financial institution whose principal business provides
finance. An LC provides such finances by extending loans or advances. It can also
include activities other than its own, but an LC must not include an Asset Finance
Company.

Infrastructure Finance Company (IFC)

IFC is an NBFC registration with the following features:

1. An IFC deploys at least 75 percent of its total assets in infrastructure loans
2. An IFC must maintain a minimum Net Owned Funds of 300 crore rupees
3. An IFC must maintain a minimum credit rating of ‘A ‘or equivalent
4. An IF must have a CRAR of 15%

Systemically Important Core Investment Company (SI-CIC)

CIC-ND-SI is an NBFC registration carrying on the business of acquisition of shares
and securities which satisfies the following conditions:-

 it holds not less than 90% of its Total Assets in the form of investments in equity
shares, preference shares, debt, or loans in group companies;

 its equity shares investments which include the instruments convertible into
equity shares within ten years from the issue date). This must be in group
companies constituting not less than 60% of the Assets.

 It does not trade in its investments in shares, debt, or loans in group companies
except through block sales for dilution or disinvestment.

 It does not carry on other NBFC activity except the following:
o Investment in deposits
o Monetary Market instruments
o Union Government Securities
o Loans to as well as investments in Debt Issuances for Group Companies
o Guarantees issued on behalf of Group Companies

 Its asset size is ₹ 100 crore or above
 It accepts public funds

NBFC Registration: Infrastructure Debt Fund

Non-Banking Financial Company IDF-NBFC is a company which the RBI registers as
an NBFC to facilitate the flow of long-term debt into infrastructure projects. IDF-NBFC
raises resources through the issue of the Rupee as well as Dollar denominated bonds
of minimum five-year maturity. Only an IFC (Infrastructure Finance Company) can
sponsor IDF-NBFCs.

NBFC Registration: Micro Finance Institution (MFI)

Micro Finance Institution (NBFC-MFI) is a non-deposit-taking NBFC having not less
than 85% of its assets like qualifying assets that satisfy the following criteria:

 Loan disbursed to a borrower with a rural household having a yearly income not
exceeding one lakh rupees or urban household income not exceeding 1.6 lakh
rupees.

 The loan amount does not exceed ₹ 50,000 in the first cycle and ₹ 1,00,000 in
subsequent cycles;

 The total indebtedness of the borrower does not exceed ₹ 1,00,000
 Tenure of the loan not to be less than 24 months for loan amount over ₹ 15,000

with prepayment without penalty
 Loan to be extended without collateral
 The aggregate amount of loans given for income generation is not less than 50

percent of the total loans provided by the MFIs
 The loan is repayable in weekly, fortnightly, or monthly instalments at the choice

of the borrower

Non-Operative Financial Holding Company

NBFC-NOFHC is a financial institution in which the RBI permits the promoter or
promoter groups to set up a new bank. These NBFCs are owned by Non-Operative
Financial Holding Companies (NOFHC). A NOFHC holds the bank as well as other
financial services companies regulated by the Apex Bank or other financial regulators.
But the regulations are limited to the extent permitted per the applicable regulatory
prescriptions.

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