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The Full form of NFBC is Non-Banking Financial Companies. NBFC refers to financial institutions that offer banking services with no banking license or do not fulfill the legal definition of a bank. Deposits done in NBFC are long term deposits or premiums, e.g., the premium paid for your LIC policy, health insurance policy, etc. These deposits are not considered as savings. These institutions are registered under the Companies Act, 1956. They work as non-banking financial institution as defined under Section 45-IA of the RBI Act, 1934. NFBCs are mainly engaged in the acquisition of shares, chit fund business, business of loans, stocks, bonds issued by the Government, insurance business, and more.

A company whose main business is related to agriculture activity, industrial activity, sale, purchase/construction of immovable property is not considered as an NBFC. Examples of NBFCs include insurance companies which are regulated by IRDA, Nidhi companies, which are notified under section 620A of the Companies Act, 1956, and are regulated by the corporate ministry, Housing finance companies, which are regulated by NHB (National Housing Bank), Merchant Banking companies, stock broking companies, venture capital fund which are regulated by SEBI, and Chit fund companies, which are defined in clause (b) of section 2 of the Chit Funds Act, 1982, and are regulated by the state government.

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