Yak Rbi Cancels Licenses Of Over 100 Nbfcs
What are NBFCs ? 
A Non-Banking Financial Company (NBFC) is a companionship registered nether the Companies Act, 1956. NBFCs are fiscal institutions that offering diverse banking services, but do non cause got a banking license. Generally, these institutions are not allowed to bring deposits from the public, which keeps them exterior the orbit of traditional oversight required nether banking regulations. NBFCs tin move offering banking services such equally loans too credit facilities, retirement planning, coin markets, underwriting too merger activities.
Difference betwixt Banks & NBFCs
NBFCs lend too brand investments too so their activities are similar to that of banks; nonetheless at that topographic point are three major differences betwixt Banks too NBFCs. They are :
- NBFC cannot bring need deposits.
- NBFCs create non shape purpose of the payment too village organisation too cannot number cheques drawn on itself.
- Deposit insurance facility of Deposit Insurance too Credit Guarantee Corporation is non available to depositors of NBFCs, different inwards illustration of banks.
Why RBI Cancelled the licenses of NBFCs
Under the PMLA (Prevention of Money Laundering Act, 2002), the NBFCs are required to render details well-nigh the identity of their clients, maintain records too render the information to the Financial Intelligence Unit. Several NBFCs are facing closure for violation of these rules. Over 1,200 NBFCs flagged equally "high risk" prone for non complying alongside a provision of the anti-money laundering constabulary too inwards Apr RBI asked them to submit their records to the regime hold upwards identified equally legally compliant. If they fail, RBI volition cancel their licenses.
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