What is financial asset as per RBI?
Financial assets are held in currency, bank deposits, debt securities, mutual funds, insurance, pension funds and small savings. Financial liabilities are primarily held in the form of loans and borrowings from banks, non-banking financial companies (NBFCs) and housing finance companies (HFCs).
What is financial income for NBFC?
The company will be treated as a non-banking financial company (NBFC) if its financial assets are more than 50 per cent of its total assets (netted off by intangible assets) and income from financial assets is more than 50 per cent of the gross income.
What are financial assets as per RBI for NBFC?
Financial activity as principal business is when a company’s financial assets constitute more than 50 per cent of the total assets and income from financial assets constitute more than 50 per cent of the gross income. A company which fulfils both these criteria will be registered as NBFC by RBI.
What is RBI income?
In financial year 2021, the total income of the Reserve Bank of India (RBI) stood at over 1.3 trillion Indian rupees.
What is financial asset as per ind as 109?
A financial asset is any asset that is: • cash; • an equity instrument of another entity; • a contractual right: – to receive cash or another financial asset from another entity; or – to exchange financial assets or financial liabilities with another entity under conditions that are potentially favourable to the entity …
Is bank FD is a financial asset?
Investments in fixed deposits cannot be treated as financial assets and receipt of interest income on fixed deposits with banks cannot be treated as income from financial assets as these are not covered under the activities mentioned in the definition of “financial Institution” in Section 45I(c) of the RBI Act 1934.
How are NBFC financial assets calculated?
The financial assets should be more than 50% of the total assets (netted off by intangible assets) and the income from financial assets should be more than 50% of the gross income. Both these tests need to be satisfied for a company to be regarded as an NBFC.
What is the 50 50 test?
The criteria s is called the 50-50 test and its as follows: The company’s financial assets must constitute 50% of the total assets. The income from financial assets must constitute 50% of the total income. It is governed by the Ministry of Corporate Affairs as well as the Reserve Bank of India.
What is seigniorage revenue?
Seigniorage is the difference in face value of money, such as a $0.25 quarter coin, and the cost to produce it. Seigniorage may be counted as positive revenue for a government when the money it creates is worth more than it costs to produce.
Is cash a financial asset?
A financial asset is a liquid asset that gets its value from a contractual right or ownership claim. Cash, stocks, bonds, mutual funds, and bank deposits are all are examples of financial assets.
What is the accounting income?
Accounting income is the profit a company retains after paying off all relevant expenses from sales revenue earned. It is synonymous with net income, which is most often found at the end of the income statement.
Is Cheque a financial asset?
Cash and cash equivalents are financial assets that include cash, cheques, and money available in bank accounts and investment securities.
What is financial income?
Financial Income is the revenue generated by the temporary surplus cash invested in short-term investments and Marketable securities. It also includes foreign exchange gains on Debt and write-backs on provisions and Charges related to financial operations.
What are the financial assets for NBFC?
How do you calculate seigniorage income?
Seigniorage is calculated as the difference between the value or worth of money and the cost of production. The cost to produce currency is often much lower than the value of money. Seigniorage for the government can be calculated by subtracting the cost of producing currency from the interest earned.
What is the difference between seigniorage and inflation tax?
Seigniorage is the revenue that state enjoys by having the monopoly to issue monetary base. Inflation tax is the loss that is sustained by the holder of real money balances and non-indexed government bonds due to inflation. Inflation reduces the purchasing power of real issuing new money.
What is principal business under RBI Act?
In fact, the term ‘principal business’ is not clearly defined by the Reserve Bank of India Act. The Reserve Bank regulation expect and ensure that only companies mainly engaged in financial activity obtain registration from it and further are regulated and supervised by it.
What is the difference between RBI Act and RBI Act?
The provisions of RBI Act are directed towards enabling RBI to issue prudential regulations that make the financial entities function on sound lines. RBI is a civil body and the RBI act is a civil Act. Both do not have specific provisions to effect recovery by attachment and sale of assets of the defaulting companies, entities or their officials.
What is the definition of deposit under RBI Act 1934?
The term ‘deposit’ is defined under Section 45 I (bb) of the RBI Act, 1934. ‘Deposit’ includes and shall be deemed always to have included any receipt of money by way of deposit or loan or in any other form but does not include:
What is the responsibility of Auditors of a company to RBI?
It is the obligatory responsibility of the auditors of such company to report to the RBI as and when he finalizes the balance sheet of such company. It is his duty to report such fact to the RBI[1].