The principal business of NBFC should be financial activities. What does conducting financial activity as “principal business” mean?

Financial activity as principal business is when a company’s financial assets constitute more than 50 per cent of the total assets (netted off by intangible assets) and income from financial assets constitute more than 50 per cent of the gross income. Although the term principal business has not been defined in the Act, but in FAQ issued by the RBI it has been cleared for better understanding and desirous company has to fulfil both the criteria. The Reserve Bank has also defined it...