NBFCs play a major role in Indian Financial System by complementing and competing with banks and by bringing in efficiency and diversity into financial intermediation. In this context, answer the following questions: Und

NBFCs are registered under the Companies Act, 2013 and their operations are governed by the Reserve Bank of India under the provisions of the Reserve Bank of India Act, 1934, particularly Sections 45-IA to 45-IC. Nature of Business: NBFCs engage in financial intermediation activities, including: Providing loans and advances. Acquisition of shares, stocks, bonds, and debentures. Leasing, hire-purchase, and factoring services. Managing portfolios of securities. Providing infrastructure finance, housing finance, and microfinance. NBFCs do not perform core banking functions like accepting demand deposits or issuing cheques but play a pivotal role in niche sectors such as SME financing, rural development, and infrastructure funding. The 50-50 Rule for NBFCs: The 50-50 Rule is a criterion for classifying a company as an NBFC. According to 50-50 rule: 50% of Assets: The company's financial assets should constitute at least 50% of its total assets. 50% of Income: At least 50% of the company's gross income should come from financial activities. This test ensures that only companies with a significant focus on financial activities are categorized and regulated as NBFCs by the RBI.