A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 and is engaged in the business of loans and advances, acquisition of shares/stock/bonds/debentures/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, sale/purchase/construction of immovable property. A non-banking institution which is a company and which has its principal business of receiving deposits under any scheme or arrangement or any other manner, or lending in any manner is also a non-banking financial company (Residuary non-banking company).

NBFCs are doing functions akin to that of banks, however there are a few differences:
(i) a NBFC cannot accept demand deposits;
(ii) it is not a part of the payment and settlement system and as such cannot issue cheques to its
customers; and
(iii) deposit insurance facility of DICGC is not available for NBFC depositors unlike in case of
banks.

In terms of Section 45-IA of the RBI Act, 1934, it is mandatory that every NBFC should be registered with RBI to commence or carry on any business of non-banking financial institution as defined in clause (a) of Section 45 I of the RBI Act, 1934.
However, to obviate dual regulation, certain category of NBFCs which are regulated by other regulators are exempted from the requirement of registration with RBI viz. Venture Capital Fund/Merchant Banking companies/Stock broking companies registered with SEBI, Insurance Company holding a valid Certificate of Registration issued by IRDA, Nidhi companies as notified under Section 620A of the Companies Act, 1956, Chit companies as defined in clause (b) of Section 2 of the Chit Funds Act, 1982 or Housing Finance Companies regulated by National Housing Bank.

A life insurance policy provides financial support to the family members of the policyholder in case of his/her demise. If you are a sole breadwinner for your family, you must buy a life insurance policy to ensure your loved ones do not face financial problem to sustain their lives, when you are not around. The money received from life insurance policy can help them live the same standard of living as they live when you are around.

Life Insurance is not necessary but is a smart decision to make, especially if you have a dependent spouse and children. It offers your family a financial support even after your death. In addition to this, it offers a number of advantages and provides a lot of flexibility on your investment. For example, you can add a critical illness benefit to cover the cost of expenses for surgeries and operations; you can withdraw a part of your maturity benefit in case of an emergency.

General Insurance is essentially Non-Life Insurance. It offers protective coverage for assets other than life. Depending on the kind of asset insured, there are different kinds of General Insurance, such as:

• Health Insurance, which insures the health of the policyholder
• Home Insurance, which covers residential properties
• Vehicle Insurance, which covers automobiles, cars, and other kinds of vehicles, depending on the specific terms of the policy
• Travel Insurance, which insures the policyholder against several mishaps/accidents that could occur during travel

• A term insurance provides substantial life insurance cover at affordable premium
• The sum assured helps your family members live the same standard of living as they live when you are around
• It gives you peace of mind by ensuring your family will have financial support even when you are not there

• Premium paid towards term insurance provide tax benefits under section 80C up to Rs. 1.5 lacs.
• The sum assured your family receives is also tax free.

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 registered with RBI have been reclassified as

(i) Asset Finance Company (AFC)
(ii) Investment Company (IC)
(iii) Loan Company (LC)
AFC would be defined as any company which is a financial institution carrying on as its principal
business the financing of physical assets supporting productive / economic activity, such as
automobiles, tractors, lathe machines, generator sets, earth moving and material handling
equipments, moving on own power and general purpose industrial machines. Principal business
for this purpose is defined as aggregate of financing real/physical assets supporting economic
activity and income arising therefrom is not less than 60% of its total assets and total income
respectively.
The above type of companies may be further classified into those accepting deposits or those not
accepting deposits.
Besides the above class of NBFCs the Residuary Non-Banking Companies are also registered as
NBFC with the Bank.