Non-Operative Financial Holding Company (NOFHC) – Concept and Idea to Excel!!
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Non-operative Financial Holding Company (NOFHC) is a type of Non-Banking Financial Company which is not an inactive form of Finance Business but do hold/acquire and often termed as promoter/promoter group which will hold the Bank as well as other financial services companies regulated by Reserve Bank of India (RBI) or other financial sector regulators, to the extent permissible under the applicable regulatory prescription.
Few notable examples of as such NOFHC are:-
- ESAF Financial Holdings Private Limited – It is promoter group/promoter company which promotes the Small Finance Bank called “ESAF Small Finance Bank”
- BANDHAN FINANCIAL HOLDINGS LIMITED – it holds the majority stake of Bandhan Bank as promoter/promoter group.
- EQUITAS HOLDINGS LIMITED – it is promoter company of small finance bank called “Equitas Small Finance Bank”
- Jana Holdings Limited – It is promoter company who hold share in small finance bank called “Jana Small Finance Bank”
Ideally on legacy perspective side the Apex Bank has built concept of providing license of Bank who are having experience in this Industry. Therefore the ongoing Non-Banking Financial Company been offered to apply for the In-principal approval to run Small Finance Bank in the guidelines of 2014. Where around 72 application is received across the India from existing Non-Banking Finance Company. Out of total applicant, all the ongoing NBFC business been shifted to small finance bank keeping those NBFC as NOFHC (i.e. Promoter or Promoter Group of Small Finance Bank) and categorize it as Core Investment Company or NOFHC against the Normal Category of NBFC.
This type of NBFC is not the active finance company dealing on regular business front instead been holding capital of Bank. Therefore it is legacy front end category to address the improvisation and development in Banking and Financial Service Sector.
The Banking and Financial Service Industry of India consist of:-
Public Sector Undertakings Bank, Private Sector Bank, Small Finance Bank, Regional Rural Banks, Foreign Bank, Co-operative Bank, Non-Banking Finance Company, Payment Bank precisely, Regulator do regulate and supervise their course of action and business scenario to promote them for better platform from existing one to scale their business.
Many of entrepreneur doing finance business obviously target to run better version of finance business, step ahead. Most of them wish to go for Small Finance Bank too. But the promotion of Small Finance Bank is subject matter of fiscal policy followed by Monetary Policy of Government of India and Reserve Bank of India respectively. Followed by recent events where Governor of RBI requested to Big NBFC for applying Universal Bank License is positive sign for the market player of this Segment. Precisely few of NBFC are also looking for acquisition of existing Bank or Small Finance Bank License. Therefore too, the Regulator understand the need of an hour and plays the instrumental role to allow the license of Bank via Non-operative Financial Holding Company.
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This is not the service offered by us but do advise the existing market player if they want to promote to the next level.