{"id":15759,"date":"2020-09-03T11:52:37","date_gmt":"2020-09-03T06:22:37","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=15759"},"modified":"2024-12-10T17:48:20","modified_gmt":"2024-12-10T12:18:20","slug":"differences-between-nbfcs-and-banks","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/differences-between-nbfcs-and-banks\/","title":{"rendered":"What are the Key Differences between NBFCs and Banks?"},"content":{"rendered":"\n

Banks and Non-Banking Financial Companies (NBFCs) are a vital part of any financial system. NBFCs are the privately-owned business entity governs by RBI\u2019s law. Banks and NBFCs have many things in common and they play a vital role in building the country\u2019s financial infrastructure. In this blog, we will look into the Key differences between NBFCs and Banks. In recent years, RBI <\/strong>has made significant changes to the compliance for NBFC due to various reasons. Now every NBFC are liable to keep the minimum threshold of Statutory Liquidity Ratio or SLR, net owned fund, and capital-to-risk weighted assets ratio to operate without legal disparities. <\/p>\n\n\n

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\"Differences<\/figure><\/div>\n\n\n

Every NBFCs operating in the country needs to follow the RBI\u2019s guidelines<\/a><\/strong>, be it a question of the lending money or renewing repayment policies. NBFC may not be as flexible as a bank on various grounds, but they often touted for easy disbursement policies. <\/p>\n\n\n\n

Read our article<\/b>:How Nidhi Companies are Different from NBFCs? \u2013 Nidhi Companies Vs NBFCs<\/a><\/mark><\/p>\n\n\n\n

Here\u2019s how RBI Describes the NBFC <\/h2>\n\n\n\n

NBFC registration<\/strong><\/a> done under the Companies Act, 1956 that provides lending services to the general public. Apart from lending money, NBFC is also involved in acquiring government-based securities, shares, and debentures.<\/p>\n\n\n\n

NBFC renders a plethora of financial\nservices to the general public, but they cannot accept the deposit of any kind\nwhatsoever, unlike traditional banks. Let\u2019s have a quick glance over these\nentities and see what they offer to the public in general. <\/p>\n\n\n\n

In relation with Banks<\/h3>\n\n\n\n

Banks are the broader version of NBFC that\ndominates the financial infrastructure of the country. Being an apex\norganization, banks are authorized to perform various activities such as\ngranting credit, accepting the deposit, clearing cheques, and managing\nwithdrawals available to the general public and business entities.<\/p>\n\n\n\n

In India, the banking system is categorized\ninto three parts such as private sector banks, public sector banks, or foreign\nbanks. They are accountable for furnishing banking solutions to end-users\nthrough a predefined framework. The ownership of the commercial bank is in the\nhand of its shareholders and other key members. Now let\u2019s move onto the section\nwhich explains the Key Differences Between Bank and NBFC.<\/p>\n\n\n\n

Key Differences\nbetween NBFC and Banks<\/h2>\n\n\n\n

Bank and NBFC can be differentiated on the following\ngrounds. <\/em><\/strong><\/p>\n\n\n\n