What are types of NBFCs?

Previously there were 3 types of NBFC’s classified by reserve bank of India:

  1. Asset Finance Company (AFC)
  2. Investment Company (IC)
  3. Loan Company (LC)

Which is 4th Category?

NBFCs engaged predominantly in the infrastructure financing represented to the RBI that there should be a separate category of infrastructure financing NBFCs in view of the critical role played by them in providing credit to the infrastructure sector. Accordingly the RBI declared in its Second Quarter Review of the Monetary Policy for the year 2009-10 as follows:

To introduce a fourth category of NBFCs as ‘infrastructure NBFCs’, defined as entities which hold minimum of 75 per cent of their total assets for financing infrastructure projects.

So, apart from the three categories viz., Asset Finance Companies, Loan companies and Investment Companies, a fourth category of NBFCs as “Infrastructure Finance Companies”(IFCs) has been introduced.

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