Asset Finance Company: Role in an Emerging India

Introduction: An Asset Finance Company is the one which provides finance for the physical assets, plant & machinery & equipment, involving a tremendous amount of investment.

Since India is considered one of the rapidly growing countries in terms of GDP, its infrastructure is developing at a considerable pace, the economy is growing faster and industrial development is taking place in almost all the sectors.

As far as the development is concerned, every business house requires big plants and machineries for expansion. In such cases, it may not be easy for them to pull out their existing funds for further development without affecting the flow of working capital.

NBFC_ND_AFC

For every capital expenditure, these business houses look out for such finance providers to cater the need of immediate funds without creating an internal clog in flow of funds. NBFCs have been more preferred options due to their reach, services and structured product offerings.

An Asset Finance Company, which is basically an NBFC categorized as an AFC, is the solution for such situations. These companies provide the funds as per the requirement of the borrower in comparatively lesser time-frame.

Obligations for Asset Finance Companies (AFCs) -They should be a registered entity with RBI; -They should follow the norms prescribed by RBI in terms of capital adequacy, credit/investment norms, Income recognition, Asset Classification, NPA provisioning, etc.; -They should follow the KYC norms; -They should adopt a Code of fair business practices.

Market Overview of AFCs in the Indian Economy Current Indian economy is experiencing slowdown in a temporary phase and is anticipating huge demand of equipment in coming time from mining industries and infrastructure sector.

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