Singh Ltd. is a company registered under the Companies Act, 2013. The company is engaged in the business of loans and advances, acquisition of…

In order to identify a particular company as Non-Banking Financial Company (NBFC), it will consider both assets and income pattern as evidenced from the audited balance sheet of the previous year to decide its principal business. The company will be treated as NBFC when (i) Financial assets of the company constitute more than 50 percent of the total assets (netted off by intangible assets) and (ii) Income from financial assets of the company constitutes more than 50 percent of the gross income. A company which fulfils both these criteria shall qualify as an NBFC and would require to be registered as NBFC by RBI. In the given case of Singh Ltd, its financial assets are 374Crore i.e., (₹ 61.75 +312.25) Total Assets (netted off by intangible assets) = 608 Crore Income from financial assets = 68 Crore Gross Income = 118.75 Crore From the above, it can be concluded that financial assets of Singh Ltd. constitute more than 50 per cent of the total assets (netted off by intangible assets) and income from financial assets of Singh Ltd. constitutes more than 50 per cent of the gross income. Hence, Singh Ltd. fulfills both the criteria to qualify as an NBFC. Thus Singh Ltd. can apply for registration under Section 45-IA of the Reserve Bank of India (Amendment) Act, 1997 in prescribed form along with the necessary documents.