Are you willing to know the detailed information about NBFC-MFIs? Here is the article which gives you a clean and clear idea about the NBFC-MFIs. As of now, we knew that the NBFC refers to Non-Banking Financial Company and MFIs refers to Micro Finance Institutions.
NBFC:-
This is a company which is registered under the Companies Act,1956, and which is engaged within the business of loans and advances, asset of shares, stocks, bonds, hire purchase insurance business but in these it does not include any institutions whose principles of business includes agriculture, industrial activity and construction of immovable property.
Here this NBFC working and operations are regulated by the RBI, within the framework of the RBI Act 1934 and the directions that are issued. All these NBFCs are directed and have to set up an offense restitution machinery, which can also deal with the issues which are relating to services to provide the outsourced agency.
Types of NBFCs in India:-
Asset Finance Company:- It is a company which has financial Institutions which is carried out on the Principle business and the Financing of these physical assets which are supporting the economic, such as automobiles, tractors, lathe machines, cranes, generators sets, earth moving and material handling equipment, which are moving on their own power and for the general purpose of the Industrial Machines.
Investment Company:- It means any company which has a Financial Institutions which is carrying out on its principal business with the acquisitions of securities.
Loan Company:- It means that any kind of company, which has a financial institution which is carrying out on its principal business for providing the Business for making loans or any other activity other than its own but it does not includes in AFC.
Infrastructure Finance Company:- It utilizes a minimum of three-fourths of their total assets for Infrastructure Loans. These funds are more than the 3 billion and a minimum of crediting rate of A and the capital to Risk-weighted Asset Ratio is of 15%.
Infrastructure Debt Fund-NBFC:- It is a company which is registered as NBFC to facilitate the flow of long term debt into the Infrastructure Projects.
NBFC-Factors:- It has the Principle Business of factoring. This Factoring has financial transactions and a type of debtor Finance.
Gold Loan NBFCs in India:- It has observed the growth in the Indian Financial Market, by owing, mainly to the recent period of appreciation in the gold price and the consequent increase in the demand for the gold loan by all the sections of society, especially the poor and the middle class to make ends meet.
Residuary Non-Banking Companies:- It is a class of NBFC, which has a company and it has a Principle Business for the receiving of the deposits and under the scheme of investment, it has Asset financing, Loan Company. These companies are required to maintain the investments as per the directions of RBI and in addition to the liquid assets.
MFI:-
It is an organization which offers the Financial Services at low-income populations. Here all the given loans to the members and many other insurances that have been offered, deposit and other services. A great scale of organizations is regarded as MIcro-finance Institutions.
Features of MFIs:-
- It has High Transaction Cost of Processing.
- It consists of replacement Capacity.
- It also has a Lack of Collateral (OR) guarantors.
- It uses a lack of access to financial institutions.
Different types of MFIS:-
- Joint Liability Group.
- Self Help Groups.
- The Grameen Bank Model.
- Rural Cooperatives.
Joint Liability Group:-
These groups can be explained as it is an Informal Group which consists of 4-10 Individuals, who tries to avail the loans against the Mutual guarantee from banks for the purpose of the agricultural and allied activities.
Self Help Groups:-
It is a type of Formal (or) Informal groups which consist of small entrepreneurs with a similar kind of socio-economic backgrounds. These individuals temporarily come together and generate a common fund which needs to meet the emergency needs for the business. These groups are generally known as Non-profit organizations.
The Grameen Bank Model:-
This Model was introduced by the Nobel Laureate Prof. Muhammad Yunus in Bangladesh in the year of 1970s. Later in India, it has been widely adopted from the Regional Rural Banks. The major goal of the system was the overall development of the rural economy which generally has financially backward classes. But this Model is not successful in India as a rural Credit and system of recovery was a real problem.
Rural Cooperatives:-
It was set up during the time of the Independence. Here they used the mechanism to all the pool of the resources of the people with relatively small means and it provides the Financial Services.
