<P> A Non Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 of India, engaged in the business of loans and advances, acquisition of shares, stock, bonds hire - purchase insurance business or chit business but does not include any institution whose principal business includes agriculture, industrial activity or the sale, purchase or construction of immovable property . </P> <P> The working and operations of NBFCs are regulated by the Reserve Bank of India (RBI) within the framework of the ((Reserve Bank of India Act, 1934)) (Chapter III - B) and the directions issued by it . On November 9, 2017, Reserve Bank of India (RBI) issued a notification outlining norms for outsourcing of functions / services by Non-Bank Financial Institution (NBFCs) As per the new norms, NBFCs cannot outsource core management functions like internal audit, management of investment portfolio, strategic and compliance functions for know your customer (KYC) norms and sanction of loans . Staff of service providers should have access to customer information only up to an extent which is required to perform the outsourced function . Boards of NBFCs should approve a code of conduct for direct sales and recovery agents . For debt collection, NBFCs and their outsourced agents should not resort to intimidation or harassment of any kind . All NBFCs' have been directed to set up a grievance redressal machinery, which will also deal with the issues relating to services provided by the outsourced agency . </P> <P> The Reserve Bank of India Act, 1934 amended on 1 December 1964 by Reserve Bank Amendment Act, 1963 . In this new' Chapter III - B' introduced to Regulate' Deposit Accepting' NBFCs . </P>

Non banking finance company (nbfc) is controlled by which organization