Advisory Services
Audit
Consulting
ESG Advisory
RBI Registration
SEBI Registration
IRDA Registration
FEMA Advisory
Compliances
IBC Services
VCFO Services
Growing
Developing
ME-1
ME-2
EU-1
EU-2
SE
Others
Select Your Location
Banks and NBFCs (Non-Banking Financial Companies) are the key financial intermediaries and offer almost similar services to customers. The basic difference between banks & NBFCs is that NBFC cannot issue cheques and demand drafts like banks. Banks take part in country’s payment mechanism whereas Non-Banking Financial Companies are not involved in such transactions.
NBFC came into both public and private sector to complement banks in providing finance to people because banks cannot cater to all sections of the society alone as finance is the basic requirement of all individuals and businesses.
Table of Contents
NBFC is a registered company which is regulated by the Reserve Bank of India under RBI Act, 1934. NBFCs are not banks, but their activities are related to lending and other activities such as providing loans and advances, credit facility, savings and investment products, trading in the money market, managing portfolios of stocks, transfer of money, etc. For commencing the activities of NBFCs, NBFC Registration is mandatory.
Their activities are concerned with hire purchasing, leasing, infrastructure finance, venture capital finance, housing finance, etc. NBFC can accept deposits, but only term deposits and deposits repayable on demand are not accepted by NBFC.
Here are some of the examples of popular NBFCs such as Kotak Mahindra Finance, SBI Factors, Sundaram Finance, ICICI Ventures.
NBFC is divided into the following categories:
Banks are the financial institution which is authorized by the government to conduct banking activities such as accepting deposits, granting credit, managing withdrawals, paying interest, clearing cheques and providing general utility services to the customers.
Banks are considered an apex organization which dominates the entire financial system of the country. They act as a financial intermediary between the depositors and borrowers. Banks ensures smooth functioning of the economy in the country.
They can be public sector banks or private sector banks or foreign banks and also responsible for making loans, creating credit, mobilization of deposits, safe and time-bound transfer of money and providing public utility services. Its ownership lies with the shareholder and they operate with the profit motive.
Here are the differences between Banks and NBFCs:
The below mentioned table will allow you to have a better and easy understanding of difference between banks and NBFCs.
Comparison Chart-
The main objective for which NBFC’s are established is to grant credit to the poor section of the society whereas the banks are the financial intermediaries authorized by the government to receive deposits and grant credit to the public. Licensing of banks and NBFCs also differ in terms that licensing requirements of a bank are more stringent in comparison to NBFC. Banks cannot operate any business other than the banking business whereas an NBFC can operate such businesses.
Read our article:Fintech and NBFC: Key differences
Ashish M. Shaji has done his graduation in law (BA. LLB) from CCS University. He has keen interests in doing extensive research and writing on legal subjects especially on corporate law. He is a creative thinker and has a great interest in exploring legal subjects.
The Alternative Investment Funds (AIFs) Pro-rata and Pari-Passu Rights Proposal Consultation Pa...
The Financial Action Task Force, i.e. FATF (the Force), is the global money laundering and terr...
Advance tax refers to the payment of the tax liability before the end of the relevant financia...
On 11.12.15, the Hon’ble Delhi High Court (HC) pronounced a landmark judgement in the case ti...
Money laundering can be defined as the process of illegal concealment of the origin of money ob...
Every assessee in India is obligated to file an income tax return and make the timely payment o...
In the recent past, India has seen burgeoning demand for internet and smartphones. The rapid ri...
The Securities and Exchange Board of India (SEBI), the capital markets regulator, has recommend...
The objective of the enactment of the Prevention of Money-laundering Act, 2002, i.e. PMLA (the...
Tax planning is a continuing effort and a management strategy for ensuring the minimization of...
Are you human?: 3 + 1 =
Easy Payment Options Available No Spam. No Sharing. 100% Confidentiality
In the last few years, the financial sector has undergone a significant transformation, and the NBFCs (Non-Banking...
23 Jul, 2020
The advancement of technology has transformed many industries and institutions. Financial institutions like NBFCs h...
30 Jul, 2020
Red Herring Top 100 Asia enlists outstanding entrepreneurs and promising companies. It selects the award winners from approximately 2000 privately financed companies each year in the Asia. Since 1996, Red Herring has kept tabs on these up-and-comers. Red Herring editors were among the first to recognize that companies such as Google, Facebook, Kakao, Alibaba, Twitter, Rakuten, Salesforce.com, Xiaomi and YouTube would change the way we live and work.
Researchers have found out that organization using new technologies in their accounting and tax have better productivity as compared to those using the traditional methods. Complying with the recent technological trends in the accounting industry, Enterslice was formed to focus on the emerging start up companies and bring innovation in their traditional Chartered Accountants & Legal profession services, disrupt traditional Chartered Accountants practice mechanism & Lawyers.
Stay updated with all the latest legal updates. Just enter your email address and subscribe for free!
Chat on Whatsapp
Hey I'm Suman. Let's Talk!