Rakesh is interested to form a Non-Banking Financial Company (NBFC) for carrying business of providing micro finance in the rural areas in the name of 'SABKO Loan Company Ltd.'. Advise him about the various categories of

The advice to Mr. Rakesh on the various categories of NBFCs would be as follows: Types of NBFC License Before applying for NBFC License, the type and category of NBFC license must first be determined. The following are the categories of NBFC Companies: Asset Finance Company (AFC): An Asset Finance Company is a company which is a financial institution carrying on as its principal business the financing of physical assets such as automobiles, tractors, lathe machines, generator sets, earth moving and material handling equipments, moving on own power and general purpose industrial machines. Investment Company: An Investment Company is any company which is a financial institution carrying on as its principal business the acquisition of securities (shares / bonds / other financial securities). Loan Company: Loan Company is any company which is a financial institution carrying on as its principal business the providing of finance whether by making loans or advances or otherwise for any activity other than its own but does not include an Asset Finance Company. Infrastructure Finance Company: Infrastructure Finance Company is a non banking finance company that deploys at least 75% of its total assets in infrastructure loans, has a minimum Net Owned Funds of ₹300 crore, maintains a minimum credit rating of "A" or equivalent with a Capital to Risk Asset Ratio of 15% Systemically Important Core Investment Company: Systemically Important Core Investment Company is an NBFC with an asset size of over ₹100 crore, accepts public funds, and is involved in the business or acquisition of shares and securities subject to the fulfillment certain conditions. Infrastructure Debt Fund: Infrastructure Debt Fund is a company registered as NBFC to facilitate the flow of long term debt into infrastructure projects. Infrastructure Debt Funds raise resources through issue of Rupee or Dollar denominated bonds of minimum 5 year maturity. Only Infrastructure Finance Companies can sponsor such companies. NBFC—Micro Finance Institution: Micro Finance Institution is a non-deposit taking NBFC that is engaged in micro finance activities. NBFC Factor: NBFC Factor is a non deposit taking NBFC engaged in the principal business of factoring. Further while considering the question, as to which category of NBFC would suit him for applying the licenses, Mr. Rakesh could be advised as below: Looking into the features of various NBFCs, 'Non-Banking Financial Company - Micro Finance Institution (NBFC-MFI)' will suit Mr. Rakesh as this is for carrying business of providing micro finance in the rural areas.