The Full Form of ‘NBC’ in Banking is ‘Non Banking Companies’.
Full Form of NBC
The full form of ‘NBC’ in banking is ‘Non Banking Companies’. This phrase often refers to companies that offer financial services but do not engage in traditional banking activities such as taking deposits or lending money. These companies are regulated by the Reserve Bank of India (RBI) through its Non-Banking Financial Companies (NBFCs) regulations.
Non-banking companies may provide services such as asset management, insurance, factoring, venture capital and other investment related activities. They can also provide consumer finance services such as personal loans and credit card loans. In addition, they can engage in money exchange and payments processing businesses. Examples of non-banking companies include NBFCs, financial institutions, venture capital firms, mutual funds and stock exchanges.
The regulatory framework for non-banking companies is different from traditional banks because they are not subject to the same stringent requirements as banks when it comes to capital adequacy ratio and reserve requirements. As a result, NBFCs can be more flexible in their operations which allows them to offer a wider range of products and services than what is available from traditional banks.
In recent years, the RBI has taken steps to strengthen the regulation of NBFCs by introducing several measures including increasing minimum capital requirements for these entities; revising their risk based supervisory framework; enhancing corporate governance practices; introducing measures to ensure transparency and disclosure in their transactions; and instituting periodic onsite examination of NBFCs by RBI officers.
Moreover, an important step taken by the RBI is the introduction of the Priority Sector Lending (PSL) guidelines which require NBFCs to lend at least 40% of its loan portfolio to priority sector borrowers like small businesses, agricultural producers and weaker sections of society who have difficulty accessing banking credit due to lack of collateral or low income levels. This has led to increased access to financing for these segments which has helped improve economic growth in India.
Overall, non-banking companies play an important role in providing financial services across various sectors of the economy especially those that have limited access to traditional banking channels due to reasons such as lack of collateral or low income levels. The RBI has taken various steps over the past few years aimed at strengthening regulation and supervision over these entities so that they operate within a sound legal framework while ensuring consumer protection standards are met.
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