Institutions Outline

Banks
NBFI Non-Banking Financial Intermediary

FI Financial Institutions

AIFI All India Financial Institutions
SFI Special Financial Institutions
II Investment Institutions
State FI State level Financial Institutions

Primary Dealers
NBFC

Banks

Refer banking industry page

Financial Institutions

Equity of major financial institutions

Institution name	Sharevalue
Exim	GOI 100%
NABARD	GOI 100%
NHB	RBI 100%
SIDBI	SBI, LIC, IDBI
DICGC	RBI 100 percent
Mudra	SIDBI 100%

NBFC

Engaged in the business of loans and advances, acquisition of shares, stock, bonds hire-purchase, insurance business or chit business but does not include any institution whose principal business includes agriculture, industrial activity or the sale, purchase or construction of immovable property.
A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 of India
NBFC defined under R BI Act 1934
Ex: Higher Education Finance Agency HEFA
NBFCs have different regulators

RBI, PFRDAI, IRDAI, SEBI, NHB, Department of Company Affairs

Nidhi companies are regulated by Ministry of Corporate Affairs

Micro Finance Institutions MFIs seek licenses under NBFC
Foreign Investment is allowed up to 100%

RBI has allowed the Non-Banking Finance Companies (NBFCs) to sell the Masala Bond to foreign investors abroad

Systemically important NBFCs are those whose asset size is of ₹ 500 crore or more
NBFCs get license under Companies Act, 1956 and Banks under Banking regulation Act.
NBFCs Vs Banks

An NBFC cannot accept Demand Deposits and cannot issue Cheques drawn on itself
An NBFC is not a part of the payment and settlement system
Deposit insurance facility of the Deposit Insurance and Credit Guarantee Corporation is not available for NBFC depositors, unlike banks

An NBFC is not required to maintain Reserve Ratios (CRR, SLR etc.)
An NBFC cannot indulge Primarily in Agricultural, Industrial Activity, Sale-Purchase, Construction of Immovable Property

Changes introduced in regulation of NBFCs June 2018

Compliance of CRAR to Govt NBFCs

Earlier Capital Adequacy Ratio CRAR provisions compliance applicable to only private NBFCs
But now, RBI extended the compliance of CRAR to both private and Govt NBFCs
Govt NBFCs have to achieve this by 2022

Compliance to treatment of income recognition, full provisioning for all non-performing assets

Classification

Based on Regulator

RBI

Asset Finance Company (AFC)

Loan for economically productive assets e.g. truck, tractor, pump set, bulldozer
Ex: SREI Equipment Finance (WHITE LABEL ATM)

Infrastructure Finance Company

Gives loan for infra. Projects.
Ex: Rural Electrification Company ltd. (REC)

Loan Company LC

Infrastructure Debt Fund (IDF)

Long term loans to highway / port developers

Investment Companies

Under RBI; Not under SEBI
Borrow to Invest in securities /funds.
Ex: Muthoot finance
NOTE: Investment Companies are under RBI while Investment Banks are under SEBI

Gold Loan NBFCs

Core investment Companies

Under RBI; Not under SEBI
Long term investment, not speculative,
Can accept time-deposit, forbidden from insurance
Ex: Tata Capital

Chit fund companies

RBI regulates along with Registrar of Chits, State Govt

Micro Finance Institutions

RBI regulates along with Department of Corporate affairs under Ministry of Corporate Affairs

Account Aggregator companies

That show the consolidated overview of all financial assets of customer to him/third party
Ex: Mint
These are regulated by different agencies

RBI - Bank balance
SEBI - Mutual funds Return on assets
PFRDA- NPS investment
IRDA - Insurance policy

Peer to Peer lending
FINTECH companies
Residuary NBFC

SEBI

Stock Broker

Ex: Share khan
They help buying-selling of shares (of their clients).Earn commission/brokerage) in between.

Mutual Funds

Investment Banks: (US term)

Merger, acquisition, Wealth Management; Underwri ting.
Citigroup

Merchant Banking Companies: (UK term)

Underwriting, Corporate advising, equity finance
Morgan Stanley

Venture Capital Fund

IRDA

Insurance Companies

Ex: LIC

PFRDA

Pension funds companies except EPFO

NPS

NHB

Housing Finance Companies

DHFL Dewan Housing Finance Corporation
NHB itself is regulated by RBI

Ministry of Corporate Affairs

Nidhi

Mutual benefit club, only members can borrow.
Ex: Mannapuram group

Micro Finance Institutions

Loan without collateral, flexible EMI
No loans above 50k; actual interest 26% coz get funds from banks / NABARD..
RBI regulates lending and interest activities and for other aspects, Ministry of Corporate Affairs regulates
Mudra bank does not regulate MFI

Based on deposit taking ability

NBFC-D

Deposit taking (Only time deposits but not demand deposits)
SLR applicable
Ex: Mahindra Finance

NBFC-ND

Non-deposit taking NBFC
Ex: Mudra bank

NBFC-ND-SI

Systematically important non-deposit taking
Asset size above 500 Crore
Tougher norms

CIC-ND-SI Core Investment Company-Non Deposit- Systemically Important

Ex: IL&FS
As per RBI, CIC-ND-SI is an NBFC

With asset size of Rs 100 crore and above [NOTE: It is 100 c ore but not 500 crore]
It holds not less than 90% of its net assets in the form of investment in equity shares, preference shares, bonds, debentures, debt or loans in group companies
Its investments in the equity shares in group companies constitutes not less than 60% of its net assets
It does not trade in its investments in shares, bonds, debentures, debt or loans in group companies except through block sale for the purpose of dilution or disinvestment
Accepts public funds

Mudra Bank

Micro Units Development and Refinance Agency
Wholly owned by SIDBI
It provide formal access of financial facilities to Non –Corporate Small Business Sector.
To promote & ensure bank finance to unfunded segments of the economy[ Shishu <50k , Kishore 50k - 5L , Tarun loans 5-10L].
Mudra bank is not a bank in true sense. It is a NBFC-ND company
No direct lending- Indirect lending
How it works

Borrower approaches lending institutions such as banks, MFI, NBFC, societies, trusts etc
Lender provide finance without any collateral under Mudra yojana

Financial Institutions - Classification