Non-Banking Financial Companies or commonly called as NBFCs have emerged as an alternative for banks in terms of raising funds for individuals as well as businesses. NBFCs also deploy funds to MSMEs in India. These have become an important part of the vast financial industry in the country. #NBFC is defined under Section 45-I of the Reserve Bank of India Act. They are registered under the Companies Act and are governed by the regulations of Reserve Bank of India. NBFC offers almost every service that banks do including performing financial intermediation, offering loans, accepting deposits, giving cash advances, leasing, hiring purchase, etc. Due to a lack of banking institutions in many areas and increasing demand for loans, more and more people are able to have a profitable business in India than ever before.
#RBI vide its circular dated April 7, 2014, notifies an inclusive definition of Net Owned Funds. Accordingly, it is
• The combination of paid-up equity share capital and free reserves as per the latest balance sheet of the company after deducting certain items from it:
• Accumulated losses;
• Deferred Revenue expenditures;
• Other intangible assets;
The resultant amount is further reduced by few other items such as:
• Investment of such companies in the share of its subsidiaries, same group companies, and other #NonBankingFinancialCompanies;
• the book value of debentures, bonds, outstanding loans and advances (including hire purchase and lease finance) made to, and deposits with its subsidiaries or companies within the same group exceeding 10% of the amount.
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