presentation on pr

8/6/2019 Presentation on PR

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PRESENTATION ON : ROLE OF NBFC IN INDIAN ECONOMY

PRESENTED TO : NAINIL SIR

PRESENTED BY : SUKHRAJ KAUR BAL( MBA 3 RD SEM )

( FINANCE )


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ROLE OF NON BANKING

COMPANIES IN INDIANECONOMY


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About SHRIRAM GROUP

SHRIRAM GROUP established in 1974 by MR Thyagrajan

Chennai based company

No.1 NBFC in Asia

Currently having 30000 crores asset under management

Over 50 companies under group

Recent Acquisition :

- GE Capital- Vishal Retail Ltd.


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MAZJOR COMPANIES OF SHRIRAM GROUP

Shriram Transport Finance

Shriram City Union Finance

Shriram General Insurance

Shriram Life Insurance

Shriram Chits

Shriram EPC &many more


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OFFERING OF SHRIRAM GROUP

OFFERINGS

MAIN PRODUCTS :

Commercial Vehicle Finance.Passenger Commercial Vehicle Finance.Multi Utility Vehicle Finance.Three wheeler Finance.Tractor Finance.Construction Equipment

Finance :OTHER PRODUCTS:

Tyre Loan.Engine Replacement Loan.Working Capital Loan.Co-Branded Credit Card.Freight bill discounting


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W HAT ARE NBFCS ?

A non-banking financial company (NBFC) is a company registered underthe Companies Act, 1956 and is engaged in the business of loans andadvances, acquisition of shares/stock/bonds/debentures/securities issuedby government or local authority or other securities of like marketablenature, leasing, hire-purchase, insurance business, chit business, but doesnot include any institution whose principal business is that of agricultureactivity, industrial activity, sale/purchase/construction of immovableproperty.

A non-banking institution which is a company and which has its principal

business of receiving deposits under any scheme or arrangement or anyother manner, or lending in any manner is also a non-banking financialcompany (residuary non-banking company).


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DIFFERENCE BETW EEN BANKs & NBFCs

NBFCs are doing functions similar to banks.

NBFCs are doing functions akin to that of banks, however thereare a few differences:

(i) a NBFC cannot accept demand deposits (demand deposits are fundsdeposited at a depository institution that are payable on demand --

immediately or within a very short period -- like your current or savingsaccounts.)

(ii) It is not a part of the payment and settlement system and as such cannotissue cheques to its customers; and

(iii) Deposit insurance facility of DICGC is not available for NBFC depositorsunlike in case of banks.


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REQUIREMENT OF REGISTRATION W ITH RBI

A company incorporated under the Companies Act,1956 and, 1934 should have a minimum net owned fund

of Rs 25 lakh (raised to Rs 2 crore from April 21, 1999).

The company is required to submit its application forregistration in the prescribed format along with

necessary documents for bank's consideration.

The bank issues certificate of registration aftersatisfying itself that the conditions as enumerated inSection 45-IA of the RBI Act, 1934 are satisfied desirousof commencing business of non-banking financialinstitution as defined under Section 45 I(a) of the RBI Act


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SALIENT FEATURES OF NBFCs REGULATION

Some of the important regulations relating to acceptance of deposits by NBFCs are as under:

o The NBFCs are allowed to accept/renew public deposits for aminimum period of 12 months and maximum period of 60 months.

They cannot accept deposits repayable on demand.

o NBFCs cannot offer interest rates higher than the ceiling rateprescribed by RBI from time to time. The present ceiling is 11 per centper annum. The interest may be paid or compounded at rests notshorter than monthly rests.


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Cont.

o NBFCs cannot offer gifts/incentives or any other additionalbenefit to the depositors.

o NBFCs (except certain AFCs) should have minimum investmentgrade credit rating.

o The deposits with NBFCs are not insured.

o The repayment of deposits by NBFCs is not guaranteed by RBI.

o There are certain mandatory disclosures about the company inthe Application Form issued by the company soliciting deposits


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TYPES OF NBFCs

The different types of NBFCs registered with RBI

The NBFCs that are registered with RBI are:(i) equipment leasing company;(ii) hire-purchase company;(iii) loan company;(iv) investment company.

With effect from December 6, 2006 the above NBFCs registeredwith RBI have been reclassified as

(i) Asset Finance Company (AFC)(ii) Investment Company (IC)(iii) Loan Company (LC)


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ASSET FINANCE COMPANY

AFC would be defined as any company which is afinancial institution carrying on as its principalbusiness the financing of physical assets supportingproductive / economic activity, such as automobiles,tractors, lathe machines, generator sets, earth movingand material handling equipments, moving on ownpower and general purpose industrial machines


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LOAN COMPANY

Loan company means a company which is a financialinstitution carrying on as it principal business theproviding of finance whether by making loans oradvances or otherwise for any activityother than its own but does not include an equipmentleasing company or a hire-purchase finance company


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INVESTMENT COMPANY

Investment Company is a company which is afinancial institution carrying on as its principalbusiness the acquisition of securities.

An investment company is a company whose mainbusiness is holding securities of other companiespurely for investment purpose.

The investment company invests money on behalf

of its shareholders who in turn share in the profitsand losses.


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PURPOSE OF CREATION OF NBFCs

BANKS-financial institutions-reached the major section of everycountry of the world still there were some rural, under-privilegedand under-served sections in each of the nations

Requirement of the services of some financial institution whichcould cater to their needs, lead to the creation of the NON-

BANKING FINANCIAL COMPANIES or simply NBFCs.i.eUNTOUCHED AREAS

IMPORTANT ROLE TO BE PLAYED

o NEED OF BETTER FINANCIAL SERVICESo UNDER-SERVICED SEGMENTS


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STRENGTHS :

The largest NBFC in IndiaThe leader in pre-owned commercial vehicle financing.Strong, stable and experienced management.Large Extensive expertise in asset valuation.Expertise in raising funds from multiple sourcesStrong financial background.700000 happy customerCustomized products

Penetration power in the marketTrust of Rular urban customer

SW OT ANALYSIS


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W EEKNESS :

More system based i.e Technology

Lower penetration in East and North Indian markets.Lack of theoretical knowledge in employees

OPPORTUNITIES :

To become world class Non Banking sectorExploring Rural IndiaExploring credit scarcity Tap more clients through partnership with private

financiers.Passenger commercial vehicle financing.Second hand tractor financing.

Liquidity crunch in the banking system.Used commercial vehicle financing


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Financing of construction equipmentTruck Bazaar to enable tapping the customers at the entry point

THREATS :

From various other NBFCEx- MFI, Private finance, Small money lenders

Economic slowdown impacting the freight movements in the countrywill lead to defaults from the truck operators due to absence of incomestream.


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ABOUT PAST, PRESENT & FUTUTRE OF NBFCs

Banks have started looking at NBFCs as competitors.

High-yielding segments such as consumer durables, twowheelers and pre- owned Cs, where NBFCs have registered stronggrowth, still offer potential to grow.

The future of the NON-BANKING SECTOR cannot be easilypredicted for the long run because it has seen through many upsand downs in its entire journey.

A merger between BANKS and NBFCs on the overall global front.

NBFCs would convert into BANKS


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FINAL WORDS

The future of the Non-Banking Financial Companieswould depend largely on their performance in thepresent slowdown. It will be a deciding factor for theirfuture scope and role in the emerging global financialmarkets.

In the PRESENT SCENARIO, it is very essential for themto come up with best of customer services round-the-world because this is the basic strength of this sector.

They need to explore all possible opportunities butalso need to strengthen their BASICS too.


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THANK YOU

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