Mumbai: The Reserve Bank of India yesterday(Dec 6, 2006) re-classified Non Banking Finance Companies (NBFCs) into three broad categories instead of the existing four groups.

The new groups are Asset Finance Company, Investment Company and Loan Company, according to the central bank.

Asset Finance Companies would include companies financing real or physical assets for productive or economic activity. The companies included in this category were divided into equipment leasing and hire-purchase category.

The AFC would include companies financing automobiles, tractors, lathe machines, generator sets, earth moving and material handling equipments, moving on own power and general purpose industrial machines.

Principal business for this purpose has been defined as aggregate of financing real or physical assets supporting economic activity. Income arising from such business should not be less than 60 per cent of its total assets and total income respectively.

The other two categories  investment and loan companies would include any financial institution carrying on as its principal business the acquisition of securities and providing of finance whether by making loans or advances or otherwise for any activity other than its own, respectively.