What is the difference between NBFC and banks?

What is the difference between NBFC and banks?

Information 08.09.2017   0 Comments   653  Add to Reading List

Before understanding the differences between banks and NBFCs, it is essential that you understand what an NBFC is. A Non-Banking Financial Company or NBFC is an organization engaged in the business of advances and loans, acquisition of shares/bonds/stocks/debentures/securities issued by local authorities or the Government or other securities that are marketable including insurance, leasing, hire-purchase and so on. One of the NBFC, TAB Capital having digital lending platform to provide fast and hassle free Loans for MSMEs and working professionals. NBFCs as compared to banks, cannot accept any demand deposits. Banks can accept demand deposits. NBFCs do not form part of the payment and settlement system in India and cannot also issue cheques drawn on itself.

NBFCs cannot avail of the deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation unlike banks. Foreign investment is allowed up to 100% in case of NBFCs and is allowed up to 74% in case of private sector banks. Maintenance of reserve ratios is also not compulsory for NBFCs unlike banks.


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