Loan Company

Definition: The Loan Company is a financial institution principally engaged in the business of providing finance to the public, whether by making loans or advances or otherwise, for any activity other than its own (Excludes equipment leasing and hire-purchase activities). The loan is a kind of an agreement wherein the lender temporarily lends property, usually…

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Hire-purchase Company

Definition: The Hire-Purchase Company is yet another non-banking finance company that principally deals in the business of hire-purchase transactions and the financing of such activities. The Hire-Purchase means buying the goods on an installment plan. This means the hirer can buy commodities in exchange for the regular installment payments (principal amount+ interest) over a period of…

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Equipment Leasing Company

Definition: The Equipment Leasing Company is a non-banking finance company which is primarily engaged in the business of leasing of equipment or financing of such activity. The term “lease” refers to the contractual agreement between the lessor (owner) and the lessee (hirer) wherein the lessor grants right to the lessee to use the equipment in…

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Investment Companies

Definition: The Investment Companies are the non-finance banking companies that are primarily engaged in the business of buying and selling of securities. Simply, a company that pools the resources of investors to reinvest it in the marketable securities ranging from shares to debentures to money market instruments are called the investment companies. The investment companies…

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Mutual Benefit Finance Companies

Definition: The Mutual Benefit Finance Companies also called as “Nidhis”, are the non-banking finance companies that enable its members to pool their money with a predetermined investment objective. The main sources of funds are share capital, deposits from its members, deposits from the general public. In other words, any company which has been notified by…

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Non-Banking Financial Companies (NBFCs)

Definition: The Non-Banking Financial Companies (NBFCs) are the financial institutions that offer the banking services, but does not comply with the legal definition of a bank, i.e. it does not hold a bank license. The non-banking financial companies are registered under the Companies Act, 1956 and deals in the business of loans and advances, investments in…

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Kiosk Banking

Definition: The Kiosk Banking is the initiative taken by the RBI for those living in villages or other remote areas who are deprived of banking services due to the non-availability of a bank branch in their locality. In such arrangement, the person is not required to go the bank to avail the banking services. Instead,…

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Traveler’s Cheque

Definition: The Traveler’s cheque is an exchange medium that can be used as a substitute for the hard currency. As the name suggests, these cheques are issued to the individuals who travel on vacations to overseas. The Traveler’s cheque provides a lot of convenience to those who travel to foreign countries, as they are not required…

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Cheque Truncation System

Definition: The Cheque Truncation System or CTS is the cheque clearance system introduced by RBI to fasten up the clearing of cheques. In this system, instead of producing the physical cheques to the payee bank, just the electronic image of the cheque along with the MICR code and other cheque credentials are transmitted to the…

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Microfinance

Definition: The Microfinance is the cluster of banking services, relatively of lower monetary amounts, designed specifically to meet the banking requirements of an unemployed or low-income people. In other words, Microfinance is the arrangement of financial services including loans, savings, insurance, money transfers and remittances offered to the lower income groups or poor entrepreneurs, who…

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