NBFC is Non-banking financial company, which is registered under the Companies Act, 1956 of India and is engaged in the business of loans and advances, acquisition of shares/ debentures /stock/bonds/securities issued by government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business, but does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase/sale/ construction of immovable property.
NBFC requires compulsory registration with the Reserve Bank to carry on the financial business as the case may be. NBFCs incorporated before January 9, 1997 to apply for such a Certificate of Registration within six months ending on July 8, 1997 to enable them to carry on their business of financial nature. After January 9, 1997 NBCFs are not allowed to commence the business of financial activities without obtaining a Certificate of Registration from the Reserve Bank. The auditors of all NBFCs are necessary to report directly to the Reserve Bank the non-compliance by any company of the above statutory provisions.
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