Applicability of section 295 of co. act on lending nbfc

Dear Shefali,

I  the NBFC a Public comnay or a private company...

because section 295 does not apply to a banking company ; Private company ; and a loan made by aa holding company to its subsidiary comapny

Provision of Sec 295(1):

Sec 295 shall not apply to-

(a) any loan made, guarantee given or security provided-

                (i) by a private company unless it is a subsidiary of a public company, or

                (ii) by a banking company;

(b) any loan made by a holding company to its subsidiary company.

(c) any guarantee given or security provided by a holding company in respect of any loan made to its subsidiary company.

Putting in a simple way:-

What are the Lending companies :-

1. Public Company

2. Private company, which is a subsidiary of Public company.

What are NOT the lending companies:-

1. Private company

2. Banking company

3. Holding ------> Subsidiary [ Loan or Guarantee ]

Coming to NBFC:

There are 3 types of NBFC's :-

(i) NBFC's accepting public deposit (NBFCs-D)

(ii) NBFC's not accepting/holding public deposit (NBFCs-ND).

(iii) Residuary Non-Banking Companies(RNBCs)

Hence, check the Memorandum whether the NBFC is a Public company or not.

If so, The provisions of Sec 295 applies.

Please correct me if i am wrong.