Taxmann Non-Banking Financial Companies By Indian Institute of Banking & Finance (IIBF) Edition April 2025

Non-Banking Financial Companies is a comprehensive and up-to-date resource that examines the critical role and evolving landscape of Non-Banking Financial Companies (NBFCs) in India. Published under the aegis of the Indian Institute of Banking and Finance (IIBF), this text discusses the regulatory frameworks, recent policy developments, and operational nuances that govern NBFCs while highlighting their impact on financial inclusion and overall economic growth. The book provides a 360-degree view of the NBFC ecosystem—from core definitions to advanced topics such as Asset Liability Management, systemic risk, resource mobilisation, governance, and customer service. It also offers in-depth coverage of the latest guidelines issued by the Reserve Bank of India (RBI), including the Scale-Based Regulation (SBR) framework categorising NBFCs into Base, Middle, Upper, and Top layers. This new regulatory approach underscores the RBI’s focus on risk-based supervision, proportional regulation, and systemic stability. With a strong emphasis on practical application, it serves as a crucial guide for readers looking to deepen their understanding of NBFCs in the rapidly transforming financial sector.

This book is intended for the following audience:

• Banking & Finance Professionals – Ideal for those working in or alongside NBFCs, commercial banks, and other financial institutions, looking to refine their expertise and keep pace with new regulations
• Academicians & Students – An invaluable study companion for those pursuing advanced courses in banking, finance, and business administration, particularly for the Certificate Course on NBFC by IIBF
• Policy Makers & Regulators – Provides holistic insights into the NBFC sector’s regulatory environment, risk management practices, and governance standards
• Entrepreneurs & Business Owners – Offers clarity on NBFC operations, credit facilitation, and funding avenues that can be leveraged for business growth

The Present Publication is the 2025 Edition, updated by Dr Wasim Ahmad (Associate Professor | Department of Economics Science – Indian Institute of Technology (IIT Kanpur). It is vetted by Mr Saswata Chaudhuri (Former Chief General Manager – State Bank of India). Taxmann exclusively publishes this book for the Indian Institute of Banking and Finance with the following noteworthy features:

• [Latest RBI Guidelines & Scale-Based Regulation (SBR)] Comprehensive breakdown of the new regulatory layers—Base, Middle, Upper, Top—and their implications for NBFCs
• [Comprehensive Coverage of NBFC Operations] In-depth chapters on credit appraisal, documentation, risk management, marketing, and governance
• [Practical Approach & Case Studies] Illustrations, including a spotlight on systemic risk (e.g., the IL&FS case), to illustrate best practices and pitfalls
• [Focus on Financial Inclusion] Discusses how NBFCs serve remote and underserved markets, bridging gaps left by traditional banking
• [Guidance for Certification] Mapped to the syllabus for the Certificate Course on NBFC, facilitating structured learning and examination preparedness
• [Expert Insights] Contributions and vetting by leading professionals and academicians, ensuring accuracy and practical relevance

The book aligns closely with the syllabus for the Certificate Course on NBFC and is divided into four modules, each comprising multiple chapters:

• Module A – Indian Financial System and Regulatory Requirements for NBFCs
  • Overview of India’s financial system, roles of RBI, SEBI, NABARD, IRDAI, etc.
  • Types of NBFCs, role in inclusive growth, relevant sections of the RBI Act 1934
  • Corporate governance and recent RBI initiatives, including Small Finance Banks, Payment Banks, MUDRA, etc.
• Module B – Resource Mobilisation & Capital Adequacy Norms
  • Exploration of various funding avenues—Equity, Public Deposits, Debentures, Commercial Paper, Bank Finance, ADRs, GDRs, ECBs
  • Regulatory compliance, prudential norms, ALM, market/operational risk management, leverage ratio
  • Systemic risk assessment, illustrated by practical cases like IL&FS
• Module C – Customer Service & Deposits
  • Fair Practices Code, KYC/AML/CFT guidelines, customer relationship management
  • Handling different types of depositor accounts, grievance redressal mechanisms, Consumer Protection Act 2019
  • Loan repayment, recovery processes, and marketing/distribution strategies
• Module D – Loans, Advances, & Investments
  • Various credit facilities—Term loans, working capital, retail loans, MSME finance, microfinance
  • Credit appraisal techniques, documentation, credit monitoring, and NPA management
  • Different types of securities and charges, and an overview of the investments spectrum—from government securities to innovative financial instruments

The structure of the book is as follows:

• Clear Module-wise Layout – Each module contains several chapters, starting with fundamental concepts and moving toward more complex topics
• Learning Objectives & Summaries – Each chapter includes objectives, key takeaways, and ‘Let Us Sum Up’ sections to reinforce learning
• Check Your Progress – End-of-chapter questions/tests to help readers self-assess their grasp of the material
• Recommended Reading – Additional resources and references for deeper research and continuous learning