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Financial System 263
Non-banking Finance Companies (NBFC)
The categories of NBFCs and the nature of their main activities currently being followed
by the RBI, which are very similar to the ones discussed by the Shah Working Group, are
as follows:
1. Equipment leasing company (ELC) means any company which is carrying on
as its principal business, the activity of leasing of equipment or the financing of
such activity.
2. Hire-purchase finance company (HPFC) means any company which is carrying
on as its principal business, hire-purchase transactions or the financing of such
transactions.
3. Housing finance company (HFC) means any company which is carrying on as
its principal business, the financing of the acquisition or construction of houses
including the acquisition or development of plots of land in connection therewith.
4. Investment company (IC) means any company which is carrying on as its
principal business, the acquisition of securities.
5. Loan company (LC) means any company which is 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. This category does not include an equipment
leasing company or a hire-purchase finance company or a housing finance company.
6. Mutual benefit financial company (MBFC) means any company which is
notified by the Central Government under Section 620A of the Companies Act
1956 (1 of 1956).
7. Miscellaneous non-banking company (MNBC) means a company carrying on
all or any of the following types of business :
(a) Managing, conducting or supervising as a promoter, foreman or agent of any
transaction or arrangement by which the company enters into an agreement
with a specified number of subscribers that every one of them shall subscribe
a certain sum in installment over a definite period and that every one of such
subscribers shall in his turn, as determines by lot or by auction or by tender
or in such other manner as may be provided for in the agreement be entitled
to the prize amount.
(b) Conducting any other form of chit or kuri which is different from the type
of business referred to above. Undertaking or carrying on or engaging in or
executing any other business similar to the business referred to above.
8. Residuary non-banking company (RNBC) means a company which receives
any deposit under any scheme or arrangement, by whatever name called, in one
lump sum or in installments by way of contributions or subscriptions or by sale
of units or certificates or other instruments, or in any other manner and which
according to the definitions contained in the Non-Banking Financial Companies
(Reserve Bank) Directions, 1977 or as the case may be, the Miscellaneous