1.

Are Non-banking Finance Companies (nbfcs) Allowed To Act As Bcs ?

Answer»

Non-Banking FINANCE Companies (NBFCs) were not allowed to be appointed as BCs by banks. However the RBI has now permitted to engage non-deposit TAKING NBFCs (NBFCs-ND) as BCs, subject to the following conditions:

  1. It should be ensured that there is no commingling of bank funds and those of the NBFC-ND appointed as BC. 
  2. There should be a specific contractual arrangement between the bank and the NBFC-ND to ensure that all possible conflicts of interest are adequately taken care of.
  3. Banks should ensure that the NBFC-ND does not adopt any restrictive practice such as offering savings or remittance functions only to its own customers and FORCED bundling of services OFFERED by the NBFC-ND and the bank does not take place.

Non-Banking Finance Companies (NBFCs) were not allowed to be appointed as BCs by banks. However the RBI has now permitted to engage non-deposit taking NBFCs (NBFCs-ND) as BCs, subject to the following conditions:


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