Non-banking finance companies (NBFCs) are organizations involved in providing financial services such as loans and advances. Unlike banks, they are not allowed to offer savings accounts and are governed by a different set of regulations.
More often than not, NBFCs help meet the credit demand left unmet by traditional banks. In India, a number of NBFCs have emerged as a viable alternative to banks, and lending services by these companies are fast gaining popularity.
One of the reasons behind the growth of NBFCs in the country today is that NBFCs offer simpler terms, faster sanctions, and easier repayment structures.
What are the services that an NBFCs offer?
NBFC are responsible for offering different types of services.
- Loans and credit facilities.
- Underwriting shares.
- Merger and acquisitions advice.
- Hire and purchase.
What are the types of NBFC in India?
There are two types of NBFC in India.
Deposit-accepting financial companies
A deposit-taking financial company is the one that accepts deposits. It is from the public, such as investment companies, and asset management companies and more.
Non-deposit accepting financial companies
Non-deposit accepting financial companies is the one that does not accept deposits from users. Such NBFCs are only allowed to lend money and loan repayments.
What are the roles of NBFCs?
- NBFC has a role to play in promoting the growth of the nation. It is because it offers customized solutions to different needs of end-users.
- They lead to building financial strength because of the offering of Micro, Small, and Medium Enterprises.
- For new businesses and borrowers with even a bit lower CIBIL rating, different types of NBFC in India are a blessing.
- They have a key role to play in the country’s development. It includes employment generation, transport development and wealth creation breaks.
What is the difference between a bank and an NBFC?
Many people are confused between a bank and an NBFC. Let’s clear the air once and for all:
- An NBFC is an organization that works without a banking license. Banks is a Government authorized company that offers banking services.
- NBFCs are operated under the Companies Act 1956, while banks under the Banking Regulation Act of 1949.
- In NBFCs, foreign investment is allowed up to 100%. It is 74% for private sector banks.
- The maintenance of reserve ratios is compulsory in banks but not in NBFCs.
- The insurance of a customer’s deposits is unavailable in an NBFC but available in banks.
What are some top NBFCs operating in India?
You can find different types of NBFC in India already active. Let’s enlist the top NBFCs of India:
- Bajaj Finance.
- Muthoot Finance.
- Shriram Trans.
- Bajaj Holdings.
- Manappuram Fin.
- Shriram City.
- M&M Financial.
- Sundaram Fin.
- CreditAccess Gr.
- L&T Finance.
- Motilal Oswal.
- PNB Gilts.
- Satin Credit.
- Bengal & Assam.
- Tata Inv Corp.
- PTC India Fin.
- Muthoot Cap.
If you were looking to get a considerable amount without complex eligibility norms and documents, you could count on an NBFC.
Top NBFCs in India may provide you with a personal loan, for example, quickly. If you have a robust credit score of 750 and more, you may get the loan approval.
Even if you don’t have a good credit score, NBFCs may approve your loan request. Your needs may be met, but you may have to deal with a slightly higher rate of interest.