Eighth Type of NBFC Formulated by RBI

Eighth Type of NBFC Formulated by RBI

RBI has issued  CIRCULAR DNBS.CC.PD.NO. 250/03.10.01/2011-12, DATED
2-12-2011 by which  it is stated that a new category of Non Banking
Financial Company for Micro Finance sector is created.Thus, a separate
category of NBFCs viz; Non Banking Financial Company-Micro Finance
Institution (NBFC-MFI) is created.

Now the 8 types of NBFC are

i. Asset Finance Company (AFC)

ii.  Investment Company (IC)

iii.  Loan Company (LC)

iv.  Infrastructure Finance Company (IFC)

v.  Core Investment Company (CIC)

vi.  Infrastructure Debt Fund- Non- Banking Financial Company (IDF-NBFC)

vii. Non-Banking Financial Company – Micro Finance Institution (NBFC-MFI).

As per the circular, in the Second Quarter Review of Monetary Policy
in November 2010, a Sub-Committee of the Central Board of the Reserve
Bank (Chairman: Shri Y. H. Malegam) was constituted to study issues
and concerns in the MFI sector. The Committee submitted its report in
January 2011. In the Monetary Policy Statement 2011-12, it was
announced that the broad framework of regulations recommended by the
Committee has been accepted by the Bank.

Details about regulatory framework can be found as detailed below

The Notification DNBS.PD.No.234 CGM(US)2011 dated December 02, 2011
containing the regulatory framework for NBFC-MFIs, the amending
notifications DNBS.PD.No.235/CGM(US) 2011 dated December 02, 2011
amending the Non- Banking Financial (Non-Deposit accepting or holding)
Companies Prudential Norms (Reserve Bank) directions, 2007 and
DNBS.PD.No.236/CGM(US)2011 dated December 02, 2011 amending the
Non-Banking Financial Companies Auditor’s Report (Reserve Bank)
Directions, 2008 are enclosed for meticulous compliance.

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*CA. Mukesh Saran