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  • Category: Miscellaneous

    NBFC- Another blow coming our way?

    NBFCs (Non banking finance companies) are firms or companies that trade in shares, stocks, loans etc. These are similar to banks. One of the reports quotes that the public should be aware of these and not involve in transactions.

    The FIU - finance intelligence unit has released a list of around 9500 companies. This accounts for around 80% of the companies in the country.The FIU's primary aim is to alert ED about crimes related to Indian Economy.

    Finance and economy are not within my grasp but I feel we are in for more pain in the near future. Can someone familiar with this cast more light for people like me.

    (PS: references are not given as many major papers have reported this)
  • #627774
    The list prepared by the Financial Intelligence Unit (FIU-IND) is having 9500 companies.The financial companies included in the list are the companies which found non-compliant to the Prevention of Money Laundering Act (PMLA) rules as on January 31 by NBFC.
    Under Section 13 of the PML Act, 2002, the Director of FIU-IND can impose fine on any banking company, financial institution or intermediary for failure to comply with the obligations of maintenance of records, furnishing information and verifying the identity of clients.The NBFC can take administrative action and impose a monetary fine, which may vary between ten thousand and one lakh rupees for each failure.
    It is better not to invest in these companies and if we have any shares I think it is better to sell off those shares. The risk is very high as of know because the governemnt has issued this list.

    always confident

  • #628023
    A depositor should take precautions before making deposit with a Non-Banking Finance Company (NBFC). Some of such precautions are as follows -

    1. The NBFC should be registered with RBI and specifically authorized by the RBI to accept deposits.
    2. NBFCs have to prominently display the Certificate of Registration (CoR) issued by the Reserve Bank on its site.
    3. The maximum interest rate that an NBFC can pay to a depositor should not exceed 12.5%.
    4. The depositor must insist on a proper receipt for every amount of deposit placed with the company. The receipt should be duly signed by an officer authorized by the company and should state the date of the deposit, the name of the depositor, the amount in words and figures, rate of interest payable, maturity date and amount.
    5. In the case of brokers/agents etc collecting public deposits on behalf of NBFCs, the depositors should satisfy themselves that the brokers/agents are duly authorized by the NBFC.
    6. The depositor must bear in mind that public deposits are unsecured and Deposit Insurance facility is not available to depositors of NBFCs.
    (Source: website of RBI)

    Let us encourage each other in sharing knowledge.

  • #628029
    Just because one bank faulted in granting loans and failed to recover. we cannot find fault with other banks which are doing their duties to the hilt. Like wise Non Banking Finance Companies are accepting deposits and in the financial business through granting loans on vehicles and also on gold. But so far no hue and cry reported from the public who are thus deceived. Therefore such reports emanating in the press may be a caution advise and that should not be take that seriously. Moreover when the NBFC 's are giving the dividend and interest regularly , there are no issues at all.
    K Mohan
    'Idhuvum Kadandhu Pogum "
    Even this challenging situation would ease

  • #628053
    The recent loss reported by PNB amounting to 13.5 thousand crore is a huge amount and if not checked in time, such trend would prove to be disasters in the long run. However, it does not mean that NBFC are far better in this regard. In the past, we have witnessed the collapse of Golden - Forest, Peerless, Sanchani, Alcheme etc.
    Non banking fiancial Institutions operate on the lines of extracting money from the common public and initially they are prompt enough to make payments timely. This creates a favourable impact on the mind - set of the investors and one fine day they disappear. So to be safe, it is always better to choose the Nationalised Banks where we can choose different instruments for the safety of our hard - earned money even though the rate of interest by such Banks are not attractive at present.

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