FAQ

Deposits Non convertible debentures Investments opportunities

FAQ on Cumulative Deposit

1. What is the minimum deposit amount required for opening a Cumulative Deposit account?

You can open a Cumulative Deposit account with us for a minimum of Rs10,000/-

2. What is the multiple in which I can open a Cumulative Deposit account?

You can open a Cumulative Deposit account with us for a minimum of Rs10,000/- and thereafter of multiples of Rs 1000/-

3. What is the range of tenure for which I can open a Cumulative Deposit account?

Our tenure ranges from a minimum of 12 months upto 3 years.

4. Is TDS applicable on Cumulative Deposits?

TDS is applicable

5. How do I approach SFL to open a Cumulative Deposit?

  • Approach any of our branches
  • Reach us through e-mail
  • Give us a call

6. Can I redeem my Cumulative Deposit before the original term?

Yes, but a premature withdrawal is subject to a penalty rate as prescribed by the organization

7. What are the nomination facilities available on Cumulative Deposits?

Yes, you can nominate your family members or individuals.

 

FAQ on Fixed Deposit

1. What is the minimum deposit amount required for opening a FD account?

The minimum deposit on FD’s with monthly interest frequency is Rs 25,000/ – Quarterly and Half yearly is Rs 10,000/- each.

2. What is the range of tenure for which I can open a FD account?

Our tenure ranges from a minimum of 12 months upto 3 years.

3. Is TDS applicable on FDs?

Yes, tax is deducted at source, from the interest on Fixed Deposits, as applicable, as per the Income Tax Act, 1961.

4. How do I approach Sf FSL to open a FD?

  • Approach any of our branches
  • Reach us through e-mail
  • Give us a call

5. What are the multiples in which I can withdraw money from my FD?

You can withdraw money in multiples of Rs 1000/-

6. Can I redeem my FD before the original term?

Yes, but a premature withdrawal is subject to a penalty rate as prescribed by the organization.

7. Can I obtain a loan from SFL on the security of my FD?

Yes, loans are available.

8. Is there any auto renewal facility available on FDs?

No, auto renewal facility is not available

9. How do I redeem my FD?

Upon maturity of FD, just furnish the FD receipt and you will be able to redeem your FD

10. What are nomination facilities available on FDs?

Yes, You can nominate your family members or individuals

 

FAQ on NBFC

1. What is a Non-Banking Financial Company (NBFC)?

A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 and is engaged in the business of loans and advances, acquisition of shares/stock/bonds/debentures/securities issued by Government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale/purchase/construction of immovable property.
A non-banking institution which is a company and which has its principal business of receiving deposits under any scheme or arrangement or any other manner, or lending in any manner is also a non-banking financial company (Residuary non-banking company).

2. NBFCs are doing functions similar to banks. What is difference between banks & NBFCs ?

NBFCs are doing functions akin to that of banks; however there are a few differences:
(i) an NBFC cannot accept demand deposits;
(ii) an NBFC is not a part of the payment and settlement system and as such an NBFC cannot issue cheques drawn on itself;
(iii) deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available for NBFC depositors unlike in case of banks

3. Is it necessary that every NBFC should be registered with RBI?

In terms of Section 45-IA of the RBI Act, 1934, it is mandatory that every NBFC should be registered with RBI to commence or carry on any business of non-banking financial institution as defined in clause (a) of Section 45 I of the RBI Act, 1934.
However, to obviate dual regulation, certain categories of NBFCs which are regulated by other regulators are exempted from the requirement of registration with RBI viz.
Exemptions from Registration

  • Venture capital fund/merchant banking companies/stock broking companies registered with SEBI.
  • Insurance company holding a valid certificate of registration issued by IRDA.
  • Nidhi companies as notified under Section 620A of the Companies Act, 1956.
  • Chit companies as defined in clause (b) of Section 2 of the Chit Funds Act, 1982.
  • Housing finance companies regulated by National Housing Bank.

4. What are the different types of NBFCs registered with RBI?

With effect from December 6, 2006 NBFCs registered with RBI were classified as:
(i) Asset Finance Company (AFC)
AFC is a company financing physical assets inducing economic activity.
AFC should have
a. Real/physical assets not less than 60%
b. Income not less than 60% of total income
Further classified into
a. Those accepting deposits and
b. Those not accepting deposits.
Another class is Residuary Non-Banking Finance Companies
(ii) Investment Company (IC)
Investment companies are those involved in acquisition of securities as its principal business
(iii) Loan Company (LC)
Loan companies are those providing finance by way of loans or advances

5. Updated on February 10, 2009 what are the requirements / is the procedure for registration with RBI?

A company incorporated under the Companies Act, 1956 and desirous of commencing business of non-banking financial institution as defined under Section 45 I(a) of the RBI Act, 1934 should have a minimum net owned fund of Rs 25 lakh (raised to Rs 200 lakh w.e.f April 21, 1999).

6. Where can one find list of Registered NBFCs and instructions issued to NBFCs?

The list of registered NBFCs is available on the web site of Reserve Bank of India and can be viewed at www.rbi.org.in. The instructions issued to NBFCs from time to time are also hosted at the above site. Besides, instructions are also issued through Official Gazette notifications. Press Release is also issued to draw attention of the public/NBFCs.

7. Can all NBFCs accept deposits and what are the requirements for accepting Public Deposits?

All NBFCs are not entitled to accept public deposits. Only those NBFCs holding a valid Certificate of Registration with authorization to accept Public Deposits can accept/hold public deposits. NBFCs authorised to accept/hold public deposits besides having minimum stipulated Net Owned Fund (NOF) should also comply with the Directions such as investing part of the funds in liquid assets, maintain reserves, rating etc. issued by the Bank.

8. Is there any ceiling on acceptance of Public Deposits? What is the rate of interest and period of deposit which NBFCs can accept?

Yes, there is a ceiling on acceptance of Public Deposits. An NBFC maintaining required NOF/Capital to Risk Assets Ratio (CRAR) and complying with the prudential norms can accept public deposits as follows:

Category of NBFC having minimum
NOF of Rs 200 lakhs

Ceiling on public
deposit

AFC* maintaining CRAR of 15% without credit rating

AFC with CRAR of 12% and having  minimum investment grade credit rating

1.5 times of NOF or Rs 10 crore whichever is less

4 times of NOF

LC/IC** with CRAR of 15% and having minimum investment grade credit rating

1.5 times of NOF

* AFC = Asset Finance Company
** LC/IC = Loan company/Investment Company edifice
As has been notified on June 17, 2008 the ceiling on level of public deposits for NBFCs accepting deposits but not having minimum Net Owned Fund of Rs 200 lakh is revised as under:

9. What are the salient features of NBFCs regulations which the depositor may note at the times of investment?

Some of the important regulations relating to acceptance of deposits by NBFCs are as under:
i. The NBFCs are allowed to accept/renew public deposits for a minimum period of 12 months and maximum period of 60 months. They cannot accept deposits repayable on demand.
ii. NBFCs cannot offer interest rates higher than the ceiling rate prescribed by RBI from time to time. The present ceiling is 12.5 per cent per annum. The interest may be paid or compounded at rests not shorter than monthly rests.
iii. NBFCs cannot offer gifts/incentives or any other additional benefit to the depositors.
iv. NBFCs (except certain AFCs) should have minimum investment grade credit rating.
v. The deposits with NBFCs are not insured.
vi. The repayment of deposits by NBFCs is not guaranteed by RBI.
vii. Certain mandatory disclosures are to be made about the company in the Application Form issued by the company soliciting deposits.

10. What is Secured debenture?

Debentures secured by the mortgage of any immovable property or other asset of the company if the amount raised does not exceed the market value of the said immovable property or other asset are excluded from the definition of ‘public deposit’.
Secured debentures are debt instruments and are regulated by Securities & Exchange Board of India.

11. Are Secured debentures treated as Public Deposit? If not who regulates them?

Debentures secured by the mortgage of any immovable property or other asset of the company, if the amount raised does not exceed the market value of the said immovable property or other asset, are excluded from the definition of ‘Public Deposit’ in terms of Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998. Secured debentures are debt instruments and are regulated by Securities & Exchange Board of India.

12. Whether NBFCs can accept deposits from NRIs?

Effective from April 24, 2004, NBFCs cannot accept deposits from NRIs except deposits by debit to NRO account of NRI provided such amount does not represent inward remittance or transfer from NRE/FCNR (B) account. However, the existing NRI deposits can be renewed.

13. Is nomination facility available to the Depositors of NBFCs?

Yes, nomination facility is available to the depositors of NBFCs. The Rules for nomination facility are provided for in section 45 QB of the Reserve Bank of India Act, 1934. Non-Banking Financial Companies have been advised to adopt the Banking Companies (Nomination) Rules, 1985 made under Section 45ZA of the Banking Regulation Act, 1949. Accordingly, depositor/s of NBFCs are permitted to nominate one person to whom the NBFC can return the deposit in the event of the death of the depositor/s. NBFCs are advised to accept nominations made by the depositors in the form similar to one specified under the said rules, viz Form DA 1 for the purpose of nomination, and Form DA2 and DA3 for cancellation of nomination and change of nomination respectively.

14. What else should a depositor bear in mind while depositing money with NBFCs?

While making deposits with an NBFC, the following aspects should be borne in mind:
(i) Public deposits are unsecured.
(ii) A proper deposit receipt which should, besides the name of the depositor/s, state the date of deposit, the amount in words and figures, rate of interest payable and the date of maturity. Depositor/s should insist on the above and also ensure that the receipt is duly signed by an officer authorised by the company in that behalf.
(iii) The Reserve Bank of India does not accept any responsibility or guarantee about the present position as to the financial soundness of the company or for the correctness of any of the statements or representations made or opinions expressed by the company and for repayment of deposits/discharge of the liabilities by the company.

15. It is said that rating of NBFCs is necessary before it accepts deposit? Is it true? Who rates them?

An unrated NBFC, except certain Asset Finance companies (AFC), cannot accept public deposits. An exception is made in case of unrated AFC companies with CRAR of 15% which can accept public deposit without having a credit rating upto a certain ceiling depending upon its Net Owned Funds (c.f Ans to Q 8). AN NBFC may get itself rated by any of the four rating agencies namely, CRISIL, CARE, ICRA and FITCH Ratings India Pvt. Ltd.

16. The symbols of minimum investment grade rating of the Credit rating agencies are:

 

Name of rating agencies

Nomenclature of minimum investment

grade credit rating (MIGR)

 

CRISIL

FA- (FA MINUS)

 

ICRA

MA- (MA MINUS)

 

CARE

CARE BBB (FD)

 

FITCH Ratings India Pvt. Ltd.

tA-(ind)(FD)

17. Can an NBFC which is yet to be rated accept public deposit?

No, an NBFC cannot accept deposit without rating (except an Asset Finance Company complying with prudential norms and having CRAR of 15%, as explained above at Ans. to Q 8).

18. When a company’s rating is downgraded, does it have to bring down its level of public deposits immediately or over a period of time?

If rating of an NBFC is downgraded to below minimum investment grade rating, it has to stop accepting public deposit, report the position within fifteen working days to the RBI and reduce within three years from the date of such downgrading of credit rating, the amount of excess public deposit to nil or to the appropriate extent permissible under paragraph 4(4) of Non-Banking Financial Companies Acceptance of Public Deposits (Reserve Bank) Directions, 1998.

19. In case an NBFC defaults in repayment of deposit what course of action can be taken by depositors?

If an NBFC defaults in repayment of deposit, the depositor can approach Company Law Board or Consumer Forum or file a civil suit in a court of law to recover the deposits.

20. The NBFCs have been made liable to pay interest on the overdue matured deposits if the company has not been able to repay the matured public deposits on receipt of a claim from the depositor. Please elaborate the provisions.

As per Reserve Bank’s Directions, overdue interest is payable to the depositors in case the company has delayed the repayment of matured deposits, and such interest is payable from the date of receipt of such claim by the company or the date of maturity of the deposit whichever is later, till the date of actual payment. If the depositor has lodged his claim after the date of maturity, the company would be liable to pay interest for the period from the date of claim till the date of repayment. For the period between the date of maturity and the date of claim it is the discretion of the company to pay interest.