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Non-Banking Financial Institutions/Companies

Non-Banking Financial Institutions/Companies

  • As at end-March 2012, there were four institutions, viz. EXIM Bank, NABARD, National Housing Bank (NHB), and the Small Industries Development Bank of India (SIDBI) regulated by the RBI as all-India financial institutions (Fls).
  • The outstanding resources mobilized at any point of time by an FI, including funds mobilized under the ‘umbrella limit’ comprising term deposits, term money borrowings, certificates of deposit (CD), commercial paper (CP), and inter-corporate loans, as prescribed by the Reserve Bank, should not exceed 10 times its net-owned funds (NOF) as per its latest audited balance sheet.
  • However, in view of the difficulties expressed by the NHB and EXIM Bank, their aggregate borrowing limit has been reviewed. Accordingly, EXIM Bank’s aggregate borrowing limit has been enhanced to 12 times its NOF for a period up to 31 August 2013 and for the NHB to 11 times of NOF for a period up to 30 September 2012.
  • The ‘umbrella limit’ for aggregate borrowings through these specified instruments should not at any time exceed 100 per cent of NOF of the Fl concerned as per its latest audited balance sheet.                                                            Non-Banking Financial Institutions/Companies
  • However, in view of the difficulties expressed by the NHB, SIDBI, EXIM Bank and NABARD, their borrowing under ‘umbrella limit’ was enhanced from 100 per cent of NOF to 150 per cent of NOF for a period of one year (for NHB, IDBI, and EXIM Bank up to 30 June 2012 and for NABARD up to 31 December 2012), subject to review.
  • Resources raised by Fls during 2011-12 were considerably higher than those raised during the previous year. While the long-term resources and short-term resources raised witnessed a sharp rise during 2011-12 as compared to a year earlier, foreign currency resources raised declined during the same period of time. The NHB mobilised the largest amount of resources, followed by NABARD and SIDBI.
  • The NBFCs as a whole accounted for 13.0% of bank assets as on march 2013. With the growing importance assigned to financial inclusion, NBFCs are being regarded as important financial intermediaries particularly for the small scale and retail sectors.                                          Non-Banking Financial Institutions/Companies
  • There are two broad categories of NBFCs based on whether they accept public deposits, viz. deposit-taking NBFCs (NBFCs- D) and non­-deposit-taking NBFCs (NBFCs-ND). The total number of NBFCs registered with the RBI witnessed a continuous decline mainly due to cancellation of certificates of registration and their exit from deposit-taking activities.
  • The total number of NBFCs registered with the RBI declined from 12,385 as at the end of June 2012 to 12,225 as on June 2013.

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