Description
This is a presentation includes Banks Vs Non Banking Finance Companies, banks vs nbfc, types, rules, Regulation Bill, Acceptance of Deposits Rules and financial analysis of nbfc.
Non-Banking Financial Companies
1
?
Alpic, Birla Global, Cholamandalam, Dewan Housing, Esanda Finance, First Leasing, GE, HDFC, Indbank Merchant Bkg, JVG Finance, Kotak Mahindra, Lloyds Finance, Magma Leasing, New India Financial Services, OM Kotak Mahindra, Prudential ICICI, RBF, Sahara India, TCFC, Upasna, Vijaya Leasing, Wipro, Yeshaswi, Zuari Leasing & Finance Ltd.,
Financial Services
NBFCs
2
? ? ? ? ? ?
?
?
Bkg Regn Act/ RBI CRR, Dep Insurance SB A/c, Clearing Hse DD TT TC LC BG CC OD TL FX Cr Priority Sector Loans Govt Treasury work Deregulated Intt rates
? ? ? ?
?
? ? ?
RBI Act, Co Act/SEBI SLR, RESERVE RD FD ICD etc Cr Rating, Regn - RBI Leasing, HP, Hsg etc Merch Bkg, Factoring Non-Fund Based No ceiling on loan intt
Financial Services
NBFCs
3
?
?
? ?
Branches abroad Service Area approach DRT, BIFR, etc Tax Advisory Service
Forex Broking ? Loan Syndication ? MNCs collaboration
?
Financial Services
NBFCs
4
?
? ? ? ? ? ?
RBI as regulator SLR Recurring and Fixed Deposits Schemes Prudential Norms ALM BD, Lease, HP, Hsg., Credit Cards, SDL BIFR, Court Cases
?
?
? ?
?
SEBI, NHB, IRDA FDs - Brokerage, Incentives,Intt, Period of Deposit, Advt., WEF March 1994 WEF Sept., 2001 As subsidiaries or exclusive NBFCs
Financial Services
NBFCs
5
? FUND
? FEE
? Deposits, Equipment Leasing, Hire Purchase, Bills Discounting, Loans/ Investments, Housing Finance, Factoring, Forfaiting, ARCs, Credit Cards etc. ? Issue Management, Portfolio Management, Corporate Counselling, Loan/Lease Syndication, M & A, Capital Restructuring, Credit Rating, CIBIL,etc.
BASED ACTIVITIES
BASED ACTIVITIES
Financial Services
NBFCs
6
?
?
? ? ? ? ? ?
B Dutta Study Group - 1971 James Raj Study Group - 1975 S Chakravarty Committee - 1985 N Vaghul Committee - 1987 S Narasimham Committee on FSR - 1991 Dr A C Shah Committee - 1992 Khanna Group - 1996, Shere Com - 1997 CM Vasudev Task Force - 1998
Financial Services
NBFCs
7
? ? ? ?
?
Banking Laws (Misc Provns) Act, 1963 NBFC Directions, 1977 MNBCs Directions, 1977 RNBCs Directions, 1987 Amendments to “RBI Act” and “Issue of NBFCs Acceptance of Public Deposits (RBI) Directions 1998 (in place of earlier Directions, 1977)
Financial Services
NBFCs
8
? ? ? ? ? ? ?
Advisory Council for Financial Insttns. Compulsory Registration of FCs Prior Approval for Change of Mgt etc Ceilings on Net Owned Funds etc Acceptance of Deposits by FCs etc Reserve Fund, Provisioning, Regulation… Powers of RBI on NBFCs and other issues
Financial Services
NBFCs
9
?
?
?
A Financial Institution which is a Company... Principal Business of receiving Deposits …and lendings etc... Such other NBI as defined by RBI with prior approval of GOI and by Notification in Gazette…..
Financial Services NBFCs 10
?
With effect from January 1997
with RBI as NBFC Credit Rating
? ? ?
Min NOF of Rs. 25 L
Financial Services
NBFCs
11
Ability to pay back Deposits ? Take proper interest of Depositors ? General Character of Management ? Adequate Capital Structure ? Not prejudicial to Financial Sector ? RBI may cancel registration for any violation of its rules by an NBFC
?
Financial Services
NBFCs
12
? ?
?
Paid Up Capital plus Free Reserves Less Accumulated Losses, if any, Deferred Revenue Expenditure & Other Intgble. Assets Less Investments in Shares of Subsidiaries/ NBFCs/Book Value of Debentures/Bonds etc./Outstanding Loans and Deposits within same Group in excess of 10 per cent of its Capital plus Reserves
Financial Services
NBFCs
13
?
? ?
?
?
LOAN COMPANIES INVESTMENT Cos HIRE PURCHASE EQUIPMENT LEASING Cos MUTUAL BENEFIT FINANCE Cos
?
?
?
?
MISCELLANEOUS FINANCE -NBNFCos MISCELLANEOUS NON-BANKING Cos RESIDUARY NONBANKING Cos HOUSING FINANCE COMPANIES
Financial Services
NBFCs
14
? ?
RNBC is a sub-category of NBFCs. RNBC is a NBFC which receives deposits and is not one of the defined categories of NBFCs (i. e. leasing company, hire purchase finance company, loan company, etc.)
?
RBI supervises the companies through a mechanism of off-site surveillance, on-site inspection and commissioned audit.
?
RNBCs are classified as a separate category as their business, which has evolved over the years, does not conform to any of the other defined NBFC businesses.
Only four companies which operate as RNBCs and are registered with RBI.
?
?
?
? ?
?
Public Deposits Deposits are categorized in terms of collection process and maturity The maturities range between 1 year to 7 years Minimum rates of interest on deposits which have been prescribed (now 3.5% on daily deposits; 5% on other deposits). Branches and through a wide network of agents.
Non Performing Assets Overdue for 6 ms/2 qrs/ 180 days Term Loans, Bills Discounted, etc Income from Investment included Other assets, receivables also… Lease Rentals, Hire Purchase Installments due for 12 months/4 quarters/365 days
Financial Services
NBFCs
19
4 way -Asset Classification Standard Assets – No default/ risk (All Performing Assets : Recoverable)
Non Performing Assets : Sub Standard Assets : due for < 2years Doubtful Assets : due for > 2 years Loss Assets : Declared/Certified irrecoverable
Financial Services NBFCs 20
Provisioning requirements For Loans, Advances, Bills, Investments Loss Assets :Full : 100 % overdue amount Doubtful :100 % of dues,in unsecured; 1 year: 20%; 1-3 years: 30%; >3 yrs: 50% in case of secured portion of assets Sub-Standard Assets : 10 % of dues
Financial Services NBFCs 21
Capital Adequacy : 15 % Tier I Capital : Paid Up; Pref Share Cap; Free Reserves etc Tier II Capital : Non Convertible Preference Shares Revaluation and General Provn. Reserves Hybrid Debt (Equity + Debt) and Subordinated Debt (fixed maturity) Tier I > or = Tier II Capital
Financial Services NBFCs 22
CAR : Risk Weighted Assets Capital to Risk Adjusted Ratio
Risk weights assigned to Assets in B/S Off Balance Sheet Items also included CAR : 15 % for NBFCs ( 9% for Banks)
Financial Services
NBFCs
23
? ? ? ?
Incorporated under Companies Act, 1956 Registered with RBI/ SEBI/ IRDA/ PFRDA/ NHB Acceptance of Public Deposits and / or Engaged in Financial Services like - 1.Lease Financing 2.Hire Purchase 3.Bill Discounting 4.Insurance 5.Merchant Banking 6.Stock Broking 7.Housing Finance 8.Investments in Securities 9.Granting of loans 11.Factoring and Forfaiting 12.Credit Rating 13.Credit Information Bureau 14.Credit Card Companies 15.Mutual Funds 16.Primary Dealers 17.Asset Reconstruction 18.Securitisation 19. Chit Funds 20. Nidhis (Mutual Benefit Companies), 21. VC / PE funding, 22. Micro Financing, etc. Banks, SIDBI and NABARD extend loans to NBFCs
?
Research PJCP 2008
NBFCs
24
? ? ? ? ? ? ? ? ?
Bhabatosh Dutta Study Group - 1971 James Raj Study Group - 1975 Sukhmoy Chakravarty Committee - 1985 Narayan Vaghul Committee - 1987 S Narasimham Committee on FSR - 1991 Dr A C Shah Committee - 1992 Khanna Group - 1996 Mrs Shere Committee - 1997 CM Vasudev Task Force - 1998
Research PJCP 2008
NBFCs
25
? FUND
? FEE
? Deposits, Equipment Leasing, Hire Purchase, Bills Discounting, Loans/ Investments, Housing Finance, Factoring, Forfaiting, ARCs, Credit Cards etc.
? Issue Management, Portfolio Management, Corporate Counselling, Loan/Lease Syndi-cation, M & A, Capital Restructuring, Credit Rating, CIBIL,etc.
BASED ACTIVITIES
BASED ACTIVITIES
Research PJCP 2008
NBFCs
26
?
NBFCs – Deposit taking NBFCs – No Deposits
?
?
Residuary Non Banking Finance Companies
Research PJCP 2008
NBFCs
27
? ?
?
? ?
Banking Laws (Misc Provns) Act, 1963 NBFC Directions, 1977 MNBCs Directions, 1977 RNBCs Directions, 1987 Amendments to “RBI Act” and “Issue of NBFCs Acceptance of Public Deposits (RBI) Directions 1998 (in place of earlier Directions, 1977) and from time to time
Research PJCP 2008
NBFCs
28
1. 2. 3. 4. 5. 6. 7.
Statutory Liquidity Ratio – 25% Credit Rating with one of the Credit Rating Agencies – CRISIL, ICRA, CARE, Fitch... Capital Adequacy Norms – 15% Minimum Capital Rs. 2 Crores Deposit Acceptance Rules linked to Credit Rating Maximum Rate of Interest offered on deposits: 12.5% pa Duration – min -1 year and max- 6 years
Research PJCP 2008
NBFCs
29
8. Rules for release of Advertisement soliciting deposits 9. Disclosures in Deposit Application Forms 10. Exposure norms / ceilings for lending 11. Income Recognition and Asset Classification norms – NPAs and Provisioning for bad debts 12. 20% Reserve – transfer from Profits every year 13. Asset Liability Management System 14. Statutory Audit as per RBI Guidelines 15. Corporate Governance requirements 16. Know Your Customer (KYC) norms compliance
Research PJCP 2008
NBFCs
30
Source : Trend and Progress of Banking in India, 2006-2007 : Reserve Bank of India
Research PJCP 2008
NBFCs
31
Research PJCP 2008
NBFCs
32
Research PJCP 2008
NBFCs
33
Research PJCP 2008
NBFCs
34
Research PJCP 2008
NBFCs
35
Research PJCP 2008
NBFCs
36
Research PJCP 2008
NBFCs
37
Research PJCP 2008
NBFCs
38
Research PJCP 2008
NBFCs
39
Research PJCP 2008
NBFCs
40
Research PJCP 2008
NBFCs
41
Research PJCP 2008
NBFCs
42
Research PJCP 2008
NBFCs
43
Research PJCP 2008
NBFCs
44
Research PJCP 2008
NBFCs
45
?
To refer to www.rbi.org.in – Trends and Progress of Banking in India, 2007
Research PJCP 2008
NBFCs
46
doc_328518865.ppt
This is a presentation includes Banks Vs Non Banking Finance Companies, banks vs nbfc, types, rules, Regulation Bill, Acceptance of Deposits Rules and financial analysis of nbfc.
Non-Banking Financial Companies
1
?
Alpic, Birla Global, Cholamandalam, Dewan Housing, Esanda Finance, First Leasing, GE, HDFC, Indbank Merchant Bkg, JVG Finance, Kotak Mahindra, Lloyds Finance, Magma Leasing, New India Financial Services, OM Kotak Mahindra, Prudential ICICI, RBF, Sahara India, TCFC, Upasna, Vijaya Leasing, Wipro, Yeshaswi, Zuari Leasing & Finance Ltd.,
Financial Services
NBFCs
2
? ? ? ? ? ?
?
?
Bkg Regn Act/ RBI CRR, Dep Insurance SB A/c, Clearing Hse DD TT TC LC BG CC OD TL FX Cr Priority Sector Loans Govt Treasury work Deregulated Intt rates
? ? ? ?
?
? ? ?
RBI Act, Co Act/SEBI SLR, RESERVE RD FD ICD etc Cr Rating, Regn - RBI Leasing, HP, Hsg etc Merch Bkg, Factoring Non-Fund Based No ceiling on loan intt
Financial Services
NBFCs
3
?
?
? ?
Branches abroad Service Area approach DRT, BIFR, etc Tax Advisory Service
Forex Broking ? Loan Syndication ? MNCs collaboration
?
Financial Services
NBFCs
4
?
? ? ? ? ? ?
RBI as regulator SLR Recurring and Fixed Deposits Schemes Prudential Norms ALM BD, Lease, HP, Hsg., Credit Cards, SDL BIFR, Court Cases
?
?
? ?
?
SEBI, NHB, IRDA FDs - Brokerage, Incentives,Intt, Period of Deposit, Advt., WEF March 1994 WEF Sept., 2001 As subsidiaries or exclusive NBFCs
Financial Services
NBFCs
5
? FUND
? FEE
? Deposits, Equipment Leasing, Hire Purchase, Bills Discounting, Loans/ Investments, Housing Finance, Factoring, Forfaiting, ARCs, Credit Cards etc. ? Issue Management, Portfolio Management, Corporate Counselling, Loan/Lease Syndication, M & A, Capital Restructuring, Credit Rating, CIBIL,etc.
BASED ACTIVITIES
BASED ACTIVITIES
Financial Services
NBFCs
6
?
?
? ? ? ? ? ?
B Dutta Study Group - 1971 James Raj Study Group - 1975 S Chakravarty Committee - 1985 N Vaghul Committee - 1987 S Narasimham Committee on FSR - 1991 Dr A C Shah Committee - 1992 Khanna Group - 1996, Shere Com - 1997 CM Vasudev Task Force - 1998
Financial Services
NBFCs
7
? ? ? ?
?
Banking Laws (Misc Provns) Act, 1963 NBFC Directions, 1977 MNBCs Directions, 1977 RNBCs Directions, 1987 Amendments to “RBI Act” and “Issue of NBFCs Acceptance of Public Deposits (RBI) Directions 1998 (in place of earlier Directions, 1977)
Financial Services
NBFCs
8
? ? ? ? ? ? ?
Advisory Council for Financial Insttns. Compulsory Registration of FCs Prior Approval for Change of Mgt etc Ceilings on Net Owned Funds etc Acceptance of Deposits by FCs etc Reserve Fund, Provisioning, Regulation… Powers of RBI on NBFCs and other issues
Financial Services
NBFCs
9
?
?
?
A Financial Institution which is a Company... Principal Business of receiving Deposits …and lendings etc... Such other NBI as defined by RBI with prior approval of GOI and by Notification in Gazette…..
Financial Services NBFCs 10
?
With effect from January 1997
with RBI as NBFC Credit Rating
? ? ?
Min NOF of Rs. 25 L
Financial Services
NBFCs
11
Ability to pay back Deposits ? Take proper interest of Depositors ? General Character of Management ? Adequate Capital Structure ? Not prejudicial to Financial Sector ? RBI may cancel registration for any violation of its rules by an NBFC
?
Financial Services
NBFCs
12
? ?
?
Paid Up Capital plus Free Reserves Less Accumulated Losses, if any, Deferred Revenue Expenditure & Other Intgble. Assets Less Investments in Shares of Subsidiaries/ NBFCs/Book Value of Debentures/Bonds etc./Outstanding Loans and Deposits within same Group in excess of 10 per cent of its Capital plus Reserves
Financial Services
NBFCs
13
?
? ?
?
?
LOAN COMPANIES INVESTMENT Cos HIRE PURCHASE EQUIPMENT LEASING Cos MUTUAL BENEFIT FINANCE Cos
?
?
?
?
MISCELLANEOUS FINANCE -NBNFCos MISCELLANEOUS NON-BANKING Cos RESIDUARY NONBANKING Cos HOUSING FINANCE COMPANIES
Financial Services
NBFCs
14
? ?
RNBC is a sub-category of NBFCs. RNBC is a NBFC which receives deposits and is not one of the defined categories of NBFCs (i. e. leasing company, hire purchase finance company, loan company, etc.)
?
RBI supervises the companies through a mechanism of off-site surveillance, on-site inspection and commissioned audit.
?
RNBCs are classified as a separate category as their business, which has evolved over the years, does not conform to any of the other defined NBFC businesses.
Only four companies which operate as RNBCs and are registered with RBI.
?
?
?
? ?
?
Public Deposits Deposits are categorized in terms of collection process and maturity The maturities range between 1 year to 7 years Minimum rates of interest on deposits which have been prescribed (now 3.5% on daily deposits; 5% on other deposits). Branches and through a wide network of agents.
Non Performing Assets Overdue for 6 ms/2 qrs/ 180 days Term Loans, Bills Discounted, etc Income from Investment included Other assets, receivables also… Lease Rentals, Hire Purchase Installments due for 12 months/4 quarters/365 days
Financial Services
NBFCs
19
4 way -Asset Classification Standard Assets – No default/ risk (All Performing Assets : Recoverable)
Non Performing Assets : Sub Standard Assets : due for < 2years Doubtful Assets : due for > 2 years Loss Assets : Declared/Certified irrecoverable
Financial Services NBFCs 20
Provisioning requirements For Loans, Advances, Bills, Investments Loss Assets :Full : 100 % overdue amount Doubtful :100 % of dues,in unsecured; 1 year: 20%; 1-3 years: 30%; >3 yrs: 50% in case of secured portion of assets Sub-Standard Assets : 10 % of dues
Financial Services NBFCs 21
Capital Adequacy : 15 % Tier I Capital : Paid Up; Pref Share Cap; Free Reserves etc Tier II Capital : Non Convertible Preference Shares Revaluation and General Provn. Reserves Hybrid Debt (Equity + Debt) and Subordinated Debt (fixed maturity) Tier I > or = Tier II Capital
Financial Services NBFCs 22
CAR : Risk Weighted Assets Capital to Risk Adjusted Ratio
Risk weights assigned to Assets in B/S Off Balance Sheet Items also included CAR : 15 % for NBFCs ( 9% for Banks)
Financial Services
NBFCs
23
? ? ? ?
Incorporated under Companies Act, 1956 Registered with RBI/ SEBI/ IRDA/ PFRDA/ NHB Acceptance of Public Deposits and / or Engaged in Financial Services like - 1.Lease Financing 2.Hire Purchase 3.Bill Discounting 4.Insurance 5.Merchant Banking 6.Stock Broking 7.Housing Finance 8.Investments in Securities 9.Granting of loans 11.Factoring and Forfaiting 12.Credit Rating 13.Credit Information Bureau 14.Credit Card Companies 15.Mutual Funds 16.Primary Dealers 17.Asset Reconstruction 18.Securitisation 19. Chit Funds 20. Nidhis (Mutual Benefit Companies), 21. VC / PE funding, 22. Micro Financing, etc. Banks, SIDBI and NABARD extend loans to NBFCs
?
Research PJCP 2008
NBFCs
24
? ? ? ? ? ? ? ? ?
Bhabatosh Dutta Study Group - 1971 James Raj Study Group - 1975 Sukhmoy Chakravarty Committee - 1985 Narayan Vaghul Committee - 1987 S Narasimham Committee on FSR - 1991 Dr A C Shah Committee - 1992 Khanna Group - 1996 Mrs Shere Committee - 1997 CM Vasudev Task Force - 1998
Research PJCP 2008
NBFCs
25
? FUND
? FEE
? Deposits, Equipment Leasing, Hire Purchase, Bills Discounting, Loans/ Investments, Housing Finance, Factoring, Forfaiting, ARCs, Credit Cards etc.
? Issue Management, Portfolio Management, Corporate Counselling, Loan/Lease Syndi-cation, M & A, Capital Restructuring, Credit Rating, CIBIL,etc.
BASED ACTIVITIES
BASED ACTIVITIES
Research PJCP 2008
NBFCs
26
?
NBFCs – Deposit taking NBFCs – No Deposits
?
?
Residuary Non Banking Finance Companies
Research PJCP 2008
NBFCs
27
? ?
?
? ?
Banking Laws (Misc Provns) Act, 1963 NBFC Directions, 1977 MNBCs Directions, 1977 RNBCs Directions, 1987 Amendments to “RBI Act” and “Issue of NBFCs Acceptance of Public Deposits (RBI) Directions 1998 (in place of earlier Directions, 1977) and from time to time
Research PJCP 2008
NBFCs
28
1. 2. 3. 4. 5. 6. 7.
Statutory Liquidity Ratio – 25% Credit Rating with one of the Credit Rating Agencies – CRISIL, ICRA, CARE, Fitch... Capital Adequacy Norms – 15% Minimum Capital Rs. 2 Crores Deposit Acceptance Rules linked to Credit Rating Maximum Rate of Interest offered on deposits: 12.5% pa Duration – min -1 year and max- 6 years
Research PJCP 2008
NBFCs
29
8. Rules for release of Advertisement soliciting deposits 9. Disclosures in Deposit Application Forms 10. Exposure norms / ceilings for lending 11. Income Recognition and Asset Classification norms – NPAs and Provisioning for bad debts 12. 20% Reserve – transfer from Profits every year 13. Asset Liability Management System 14. Statutory Audit as per RBI Guidelines 15. Corporate Governance requirements 16. Know Your Customer (KYC) norms compliance
Research PJCP 2008
NBFCs
30
Source : Trend and Progress of Banking in India, 2006-2007 : Reserve Bank of India
Research PJCP 2008
NBFCs
31
Research PJCP 2008
NBFCs
32
Research PJCP 2008
NBFCs
33
Research PJCP 2008
NBFCs
34
Research PJCP 2008
NBFCs
35
Research PJCP 2008
NBFCs
36
Research PJCP 2008
NBFCs
37
Research PJCP 2008
NBFCs
38
Research PJCP 2008
NBFCs
39
Research PJCP 2008
NBFCs
40
Research PJCP 2008
NBFCs
41
Research PJCP 2008
NBFCs
42
Research PJCP 2008
NBFCs
43
Research PJCP 2008
NBFCs
44
Research PJCP 2008
NBFCs
45
?
To refer to www.rbi.org.in – Trends and Progress of Banking in India, 2007
Research PJCP 2008
NBFCs
46
doc_328518865.ppt