In the global economy a new breed of financial institutions known in the banking arena is non-bank financial institutions (NBFIs).
Generally the segment of financial institutions which consist of financial companies other than banks is called non-banking sector. As such it includes a wide range of specialized institutions like Insurance Company, Housing Finance Company, Leasing company, Investment Company etc.
Section 2(j) of “The Financial Institutional Act, 1963’ defines finance companies as follows:
“Financial institutions” means a non-banking institution which
- Gives loans or advances for industry, commerce, agriculture or housing, or
- Carries on business of the underwriting or acquisition of, or the investment or reinvestment in, shares, stock, bonds, debentures or debenture stock or securities issued by the Government or any local authority, or
- Carries on business of hire purchase transactions including leasing of machinery or equipment; or
- Finance venture capital, and includes merchant bank, investment company, mutual company, leasing company or building society.