identification of principal business of nbfc
Gaurav Aggarwal
(Querist) 18 May 2009
This query is : Resolved
Hi,
RBI came out with a press release on April 08, 1999 inwhich it said that in order to identify identify a particular company as a non-banking financial company (NBFC), it will consider both, the assets and the income pattern as evidenced from the last
audited balance sheet of the company to decide its principal business. The
company will be treated as an NBFC if its financial assets are more than 50
per cent of its total assets (netted off by intangible assets) and income from
financial assets should be more than 50 per cent of the gross income. Both
these tests are required to be satisfied as the determinant factor for principal
business of a company.
Now my question is whether both these two tests (Assets and Income )should hold true for a company to qualify as NBFC or either one of them??
Secondly, does any fee income earned as a brokerage for arranging a loans qualify as "income from financial assets"??
Thirdly, does the fee income charged from an asset holder (lender) for servicing his loan (administering the repayments and helping in recovery) qualify as "income from financial assets"??
rgds..
A V Vishal
(Expert) 19 May 2009
Dear Gaurav
Answer to Q1. is the company should qualify in both the tests.
Answer to Q2. Income from brokerage is misc income/other income and doesnot partake the nature as income from financial assets.
Answer to Q3. Is same as above and recovery income doesnot qualify as income from financial assets.
Gaurav Aggarwal
(Querist) 19 May 2009
Thanks Vishal for the prompt and clear replies
