The Ministry of Finance has notified that Non-Banking Financial Institutions (NBFCs) having assets worth 100 Crore rupees and above can be conferred the status of Financial institutions.
This comes in the exercise of the powers conferred by subclause (iv) of clause (m) of subsection (1)of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act or SARFAESI Act, 2002.
A financial institution is a company dealing with financial and monetary transactions. In India, commercial banks, investment banks, insurance companies, and brokerage firms usually function as financial institutions. They are able to supply money when none is available on the market. NBFCs on the other hand, do not hold banking licenses but can provide bank-like functions.
Earlier the eligibility limit of debt recovery of NBFCs according to SARFAESI Act stood at Rs.500 Crore of asset size or loan size of Rs.1 Crore.
With this move, the new-found power of the NBFCs might closely be subjected to the regulations of the Central Government.
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