{"id":69496,"date":"2025-06-07T18:04:51","date_gmt":"2025-06-07T12:34:51","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=69496"},"modified":"2025-06-07T18:09:56","modified_gmt":"2025-06-07T12:39:56","slug":"how-an-nbfc-license-impacts-your-business-operations-and-growth","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/how-an-nbfc-license-impacts-your-business-operations-and-growth\/","title":{"rendered":"How an NBFC License Impacts Your Business Operations and Growth?"},"content":{"rendered":"\n<p>Non-banking Financial Companies (NBFCs) play a crucial role in the evolving landscape of the financial ecosystem in India. It provides essential financial services that contribute to economic growth. Over time, NBFCs have evolved, boosting the Indian economy, especially in bridging the credit gap for underserved segments of society. Unlike traditional banks, NBFCs offer a wide range of financial services without accepting demand deposits from the public.<\/p>\n\n\n\n<p>In the year 2024, the Reserve Bank of India reported that the NBFC growth in credit has declined to 7.8 per cent, down from 19 % a year earlier.<\/p>\n\n\n\n<p>A Non-Banking Financial Company faces both challenges and opportunities. Therefore, securing an NBFC license is not only a regulatory formality but it is a strategic move that significantly impacts and influences your business operation and growth. &nbsp;This blog will take you to delve into how an NBFC license impacts your business operations and growth.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/how-an-nbfc-license-impacts-your-business-operations-and-growth\/#Understanding_NBFCs\" >Understanding NBFCs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/how-an-nbfc-license-impacts-your-business-operations-and-growth\/#Talk_To_Expert\" >Talk To Expert<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/how-an-nbfc-license-impacts-your-business-operations-and-growth\/#How_an_NBFC_License_Impacts_Your_Business_Operations_and_Growth\" >How an NBFC License Impacts Your Business Operations and Growth?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/how-an-nbfc-license-impacts-your-business-operations-and-growth\/#NBFC_Licensing_Process\" >NBFC Licensing Process<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/how-an-nbfc-license-impacts-your-business-operations-and-growth\/#Operational_Impact_of_an_NBFC_License\" >Operational Impact of an NBFC License<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/how-an-nbfc-license-impacts-your-business-operations-and-growth\/#Growth_Opportunities_of_NBFC\" >Growth Opportunities of NBFC<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/corpbiz.io\/learning\/how-an-nbfc-license-impacts-your-business-operations-and-growth\/#Challenges_and_Considerations_of_NBFCs_in_India\" >Challenges and Considerations of NBFCs in India<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/corpbiz.io\/learning\/how-an-nbfc-license-impacts-your-business-operations-and-growth\/#NBFC_Market_Size_in_India_2025_Projections\" >NBFC Market Size in India 2025 Projections<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/corpbiz.io\/learning\/how-an-nbfc-license-impacts-your-business-operations-and-growth\/#In_a_Nutshell\" >In a Nutshell<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/corpbiz.io\/learning\/how-an-nbfc-license-impacts-your-business-operations-and-growth\/#Frequently_Asked_Questions\" >Frequently Asked Questions<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Understanding_NBFCs\"><\/span>Understanding NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act 1956 or the Companies Act 2013. It is engaged in the business of loans and advances, as well as the acquisition of shares, stocks, bonds, debentures, or securities issued by governments, local authorities, or other marketable securities, such as leasing and hire purchases. Unlike a traditional bank, financial services do not hold a banking license, also it does not accept demand deposits from the public. NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on themselves.<\/p>\n\n\n\n<p>NBFCs are not subject to the banking regulations and oversight by federal and state authorities adhered to by traditional banks. Some of the examples of NBFCs include investment banks, mortgage lenders, money market funds, insurance companies, hedge funds, private equity funds, and <strong><a href=\"https:\/\/corpbiz.io\/peer-to-peer-lending-license\">P2P lenders<\/a><\/strong>. Therefore, NBFC&#8217;s adaptability enables them to serve niche markets by providing customized financial solutions that traditional banks often overlook.<\/p>\n\n\n\n<h2><span class=\"ez-toc-section\" id=\"Talk_To_Expert\"><\/span>Talk To Expert<span class=\"ez-toc-section-end\"><\/span><\/h2><div class=\"calling-person blog_cta my-4\"> \n\n  \n\n    <div class=\"row\"> \n\n        <div class=\"col-xs-12 col-sm-12 col-md-12 col-lg-12\"> \n\n            <div class=\"d-flex flex-nowrap\"> \n\n                <div class=\"user-online\"> <img decoding=\"async\" src=\"https:\/\/corpbiz.io\/img\/user.jpg\" alt=\"corpbiz\"> <\/div> \n\n                <div class=\"user-online-details ms-3 align-self-center\"> \n\n                    <h2 class=\"text-white mt-0\"><span class=\"ez-toc-section\" id=\"How_an_NBFC_License_Impacts_Your_Business_Operations_and_Growth\"><\/span> How an NBFC License Impacts Your Business Operations and Growth? <span class=\"ez-toc-section-end\"><\/span><\/h2> \n\n                    <p class=\"mt-3\"><i class=\"fa fa-star\"><\/i><i class=\"fa fa-star\"><\/i><i class=\"fa fa-star\"><\/i><i \n\n                            class=\"fa fa-star\"><\/i><i class=\"fa fa-star-half-full\"><\/i><span \n\n                            class=\"ms-2 text-white\">(4.8)<\/span><\/p> \n\n                <\/div> \n\n            <\/div> \n\n          \n\n        <\/div> \n\n     \n\n        <div class=\"col-xs-12 col-sm-12 col-md-12 col-lg-8 mx-auto\"> \n\n            <div class=\"d-flex justify-content-between call-chat\"> <a href=\"tel:919121230280\"> <span>Call Now \n\n            <\/span><img decoding=\"async\" class=\"ms-2\" src=\"https:\/\/corpbiz.io\/admin\/style\/images\/userfiles\/image\/new_call_icon.png\" \n\n                alt=\"Call With \" width=\"32px\"> \n\n        <\/a> <a href=\"https:\/\/api.whatsapp.com\/send?phone=919289379709&#038;text=Hi%20Corpbiz\" target=\"_blank\" rel=\"noopener\"> <span>Chat With Us<\/span><img decoding=\"async\" class=\"ms-2\" \n\n                src=\"https:\/\/corpbiz.io\/img\/chat-with-expert.png\" alt=\"Chat With \" width=\"32px\"> <\/a> <\/div> \n\n        <\/div> \n\n    <\/div> \n\n<\/div>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NBFC_Licensing_Process\"><\/span>NBFC Licensing Process<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>To obtain an NBFC license, the applicant will have to go through a rigorous regulatory framework as per the guidelines and rules set by the Reserve Bank of India; the applicant entities must have a sound financial health and robust governance structure to operate the same. According to the <strong><a href=\"https:\/\/corpbiz.io\/rbi\">RBI<\/a><\/strong>, any company is considered an NBFC if 50% of the total income of the company comes from the financial asset and more than 50% of its total asset is a financial asset.<\/p>\n\n\n\n<p>The company must be registered as a public or private company, must have a minimum of Rs. 10 crores Net Owned Fund; also, one-third of all directors must have finance-related work experience, and must also comply according to the norms and regulations under the Capital Compliances and FEMA laws.<\/p>\n\n\n\n<p>Before granting the license, the RBI will also assess the fit and proper status of the NBFC promoters and senior management to ensure their integrity and whether they fit the criteria of selection. Accordingly, once satisfied, the Reserve Bank of India will then issue an NBFC license to the company. Post NBFC license, they must regularly submit financial and prudential reports to the RBI for monitoring and supervision.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Operational_Impact_of_an_NBFC_License\"><\/span>Operational Impact of an NBFC License<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The operational impact of an NBFC license is as follows:<\/p>\n\n\n\n<ol type=\"1\" start=\"1\">\n<li><strong>Regulatory Compliance<\/strong><\/li>\n<\/ol>\n\n\n\n<p>An NBFC license is mandatory to comply with the RBI\u2019s regulatory framework, ensuring financial stability and consumer protection. While this exposes to various operational challenges and difficulties, it also instils discipline and enhances credibility.<\/p>\n\n\n\n<p>2. <strong>Access to Capital<\/strong><\/p>\n\n\n\n<p>It is easier for licensed NBFCs to attract institutional investors and raise funds due to the regulatory oversight and transparency associated with the license. However, this availability to access capital from various investors is crucial for scaling the NBFC business operations and expanding services. Additionally, it also enhances investor confidence to fuel acquisition budgets<\/p>\n\n\n\n<p>3. <strong>Market Expansion<\/strong><\/p>\n\n\n\n<p>The NBFC, with a license, can legally offer a broader range of financial products and facilities, enabling them to easily enter into new markets and customer segments, especially into the sector of underserved rural and semi-urban areas.<\/p>\n\n\n\n<p>4. <strong>Access to Government Schemes &amp; lending subsidies<\/strong><\/p>\n\n\n\n<p><a href=\"https:\/\/corpbiz.io\/nbfc-registration\"><strong>NBFC license<\/strong><\/a> also gives access to government schemes and lending subsidies. It can offer loans under schemes like PMMY (Pradhan Mantri Mudra Yojana), Stand-up India, SIDBI refinance, and NABARD co-financing.<\/p>\n\n\n\n<p>5. <strong>Protection against unregulated or informal lenders<\/strong><\/p>\n\n\n\n<p>Once the NBFC is licensed, it will no longer compete with the shady lenders. RBI regulations will protect customers, and NBFCs will be formally part of the formal credit ecosystem, etc.<\/p>\n\n\n\n<p>6. <strong>Reduces Friction in the Customer Onboarding Journey<\/strong><\/p>\n\n\n\n<p>With the evolving technology, the modern customer seeks financial transactions, such as no paperwork, no waiting, etc. NBFCs can legally adopt CKYC for the fast onboarding of new customers, video KYC for remote verification, digital signature &amp; eStamping for loan agreement execution.<\/p>\n\n\n\n<p>7. <strong>Builds instant credibility and trust among the customers<\/strong><\/p>\n\n\n\n<p>In the generation of digital finance and online lending, trust is everything. An NBFC registration has a direct impact on how the brand is perceived in the market.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Growth_Opportunities_of_NBFC\"><\/span>Growth Opportunities of NBFC<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The growth opportunities of NBFC are as follows:<\/p>\n\n\n\n<ol type=\"1\" start=\"1\">\n<li><strong>Increased Financial Inclusion<\/strong><\/li>\n<\/ol>\n\n\n\n<p>A Non-Banking Financial Company has been playing an important role in financial inclusion in India. It has played an instrumental role in reaching out to underserved, unbanked segments of the population. Individuals and small companies that are not eligible to obtain loans or credit from traditional banks are often met by the NBFC, thus contributing to the overall bridging of the financial divide.<\/p>\n\n\n\n<p>2. <strong>Technological Advancements and Digitalization<\/strong><\/p>\n\n\n\n<p>The global technological advancements and the adoption of digital tools have significantly boosted the overall growth of NBFCs in India. Starting from online applications to easy loan tracking, digitalisation has streamlined the NBFC business operations and enhanced the customer experience. Leveraging technology can further help NBFCs reduce turnaround times and operational costs, thus making financial services more accessible and efficient. &nbsp;<\/p>\n\n\n\n<p>3. <strong>Government Initiatives and Regulatory Support<\/strong><\/p>\n\n\n\n<p>The initiatives taken by the government and regulatory bodies, such as the Reserve Bank of India (RBI), have played a pivotal role in the growth of Non-banking Financial Companies (NBFCs) in India. Some initiatives, such as priority sector lending and relatively flexible regulatory frameworks, have provided a strong foundation for NBFCs to thrive.<\/p>\n\n\n\n<p>4. <strong>Strategic Partnerships<\/strong><\/p>\n\n\n\n<p>Non-Banking Financial Companies often collaborate with fintech companies, leveraging technology to expand their reach and offer diversified services, thereby boosting and accelerating growth.<\/p>\n\n\n\n<p>5. <strong>Lack of Access to traditional banking<\/strong><\/p>\n\n\n\n<p>Typically, traditional banks often encounter difficulties in reaching and facilitating rural and semi-urban areas and addressing niche financial needs. NBFCs, on the other hand, have successfully filled this gap, driving local economic activity and entrepreneurship.<\/p>\n\n\n\n<p>6. <strong>Flexibility and Quick Disbursement of Loans<\/strong><\/p>\n\n\n\n<p>Unlike a traditional bank, NBFC lending in India is characterised by fewer regulatory and bureaucratic hurdles, thus facilitating smooth loan processing. Therefore, their flexibility and customer-focused approach make NBFCs an attractive option, especially for those individuals and businesses seeking urgent financial assistance.<\/p>\n\n\n\n<p>7. <strong>Diverse Product Offerings<\/strong><\/p>\n\n\n\n<p>NBFCs in India also offer a wide range of financial products, including personal loans, vehicle loans, business loans, and many more. This diversity enables NBFCs to reach diverse segments of customers, further solidifying their role in India&#8217;s financial ecosystem.<\/p>\n\n\n\n<p>8. <strong>Access to Capital and Funding<\/strong><\/p>\n\n\n\n<p>The ability of NBFCs to access capital and funding from diverse sources, including financial institutions, is significantly crucial to their sustained growth and their capacity to meet the credit needs of a wide range of customers.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Challenges_and_Considerations_of_NBFCs_in_India\"><\/span>Challenges and Considerations of NBFCs in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The challenges and considerations of NBFCs in India are as mentioned below:<\/p>\n\n\n\n<ol type=\"1\" start=\"1\">\n<li><strong>Regulatory Changes<\/strong><\/li>\n<\/ol>\n\n\n\n<p>The dynamic regulatory framework for NBFCs in India requires them to stay agile and adapt to the new regulatory compliance requirements, which can overall impact growth and business operational strategies.<\/p>\n\n\n\n<p>2. <strong>Risk Management<\/strong><\/p>\n\n\n\n<p>It is also essential for NBFCs to have effective risk management practices in order to maintain asset quality and ensure long-term sustainability, especially in conditions of a volatile market.<\/p>\n\n\n\n<p>3. <strong>Non-Performing Assets (NPAs)<\/strong><\/p>\n\n\n\n<p>One of the most notable challenges of an NBFC is the increasing number of NPAs whenever loans or advances stop generating income due to the borrowers&#8217; inability to make scheduled payments. High levels of NPAs can negatively impact the NBFCs&#8217; profitability, strain liquidity and hinder the ability to extend fresh credit.&nbsp;<\/p>\n\n\n\n<p>4. <strong>Intensified Competition<\/strong><\/p>\n\n\n\n<p>With the rise of fintech startups and digital banks, the NBFC sector in India is increasing while the larger NBFCs maintain their position in the competitive environment. On the other hand, smaller NBFC struggles to compete against well-established companies due to limited resources and challenges in scaling business operations effectively.<\/p>\n\n\n\n<p>5. <strong>Technological Disruptions<\/strong><\/p>\n\n\n\n<p>While technology has played a crucial role in the overall growth of the NBFC, it is essential to stay updated and equipped with technological advancements to protect against potential cyber threats. While it would be difficult for small NBFCs to invest in such technology compared to larger NBFCs due to financial constraints.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"NBFC_Market_Size_in_India_2025_Projections\"><\/span>NBFC Market Size in India 2025 Projections<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The NBFC market size in India 2025 projections are as follows:<\/p>\n\n\n\n<ul>\n<li>As per the report for the financial year (FY2026), the overall NBFC credit is expected to reach Rs. 60 trillion, which was approximately Rs. 52 trillion in December 2024.<\/li>\n\n\n\n<li>As of December 2024, retail assets like microfinance, MSME, and personal loans accounted for 58% of total NBFC credit.<\/li>\n\n\n\n<li>As per the report, the <strong><a href=\"https:\/\/corpbiz.io\/microfinance-company-registration\">Microfinance Institutions<\/a><\/strong> (NBFC-MFIs), a type of NBFC, its growth is projected to grow at around 4% in FY2025, reflecting a significant decline from the 28% growth witnessed in FY2024. This is because of rising credit costs and lower profit margins.<\/li>\n\n\n\n<li>On the other hand, though specific, precise projections for 2030 NBFC growth are limited, it is still expected to continue its expansion in rural India with the constant evolution of a digital transformation that leads to increased adoption of digital lending platforms and AI-driven credit assessments, which will overall enhance the outreach and efficiency of the potential customers.<\/li>\n\n\n\n<li>Also, by 2030, the NBFC will cover to fulfil the unique needs of rural populations by providing customised financial products such as microloans, healthcare financing, education loans, etc.<\/li>\n\n\n\n<li>Various government initiatives and policies, such as the Pradhan Mantri Jan Dhan Yojana and Mudra Yojana, will continue to boost financial inclusion efforts.<\/li>\n<\/ul>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"In_a_Nutshell\"><\/span>In a Nutshell<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Securing an NBFC license is more than a regulatory requirement. It is a strategic enabler that empowers businesses to actively participate in India\u2019s expanding financial ecosystem. A licensed NBFC enjoys increased credibility, better access to capital, the ability to scale operations, and the opportunity to cater to underserved market segments through innovative and flexible financial solutions.<\/p>\n\n\n\n<p>While regulatory compliance, risk management, and competition present ongoing challenges, the benefits in terms of growth potential, customer trust, and integration with government initiatives outweigh the hurdles. With the right governance, technology adoption, and strategic partnerships, an NBFC license can serve as a powerful catalyst for operational efficiency, market expansion, and long-term sustainability.<\/p>\n\n\n\n<p>For businesses aiming to make a meaningful impact in the financial sector, obtaining an NBFC license is a decisive step toward both compliance and competitive advantage.<\/p>\n\n\n\n<p>To get expert assistance for NBFC registration in India, visit <a href=\"https:\/\/corpbiz.io\/\" target=\"_blank\" rel=\"noreferrer noopener\">https:\/\/corpbiz.io\/<\/a>.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Frequently_Asked_Questions\"><\/span>Frequently Asked Questions<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n<div class=\"saswp-faq-block-section\"><ol style=\"list-style-type:none\"><li style=\"list-style-type: none\"><h3>What are the advantages of NBFC Registration?<\/h3><p class=\"saswp-faq-answer-text\">Some of the major advantages of NBFC registration are legal recognition as financial entities, attracting a wide range of investors, partners, and customers while ensuring long-term business growth.<\/p><li style=\"list-style-type: none\"><h3>What is the role of NBFCs in economic growth?<\/h3><p class=\"saswp-faq-answer-text\">One of the roles of NBFCs is to support people from both urban and rural areas of India to meet their financial needs and requirements, and eventually support the Indian economic system. Meanwhile, they help micro-businesses to promote economic growth and provide micro-credit to women.<\/p><li style=\"list-style-type: none\"><h3>Who regulates NBFCs?<\/h3><p class=\"saswp-faq-answer-text\">Just like a traditional bank, NBFCs are also regulated by the RBI (Reserve Bank of India). They have to comply with the directions and guidelines set by the RBI to stay relevant in the market.<\/p><li style=\"list-style-type: none\"><h3>What are the main functions of NBFC?<\/h3><p class=\"saswp-faq-answer-text\">The main functions of NBFC are as follows:<br>&#8211; Retail Financing<br>&#8211; Infrastructural Funding<br>&#8211; Hire Purchase Services<br>&#8211; Trade Finance<br>&#8211; Asset Management companies, etc.<\/p><li style=\"list-style-type: none\"><h3>What are the restrictions of NBFC?<\/h3><p class=\"saswp-faq-answer-text\">The restrictions of NBFC include a principal business related to agricultural and industrial activity, purchase or sale of any goods, excluding securities.<\/p><li style=\"list-style-type: none\"><h3>What is the role of NBFCs in the Financial ecosystem?<\/h3><p class=\"saswp-faq-answer-text\">Some of the major roles of NBFCs in the financial ecosystem are as follows:<br>&#8211; Bridging the Credit Gap<br>&#8211; Supporting MSMEs and Start-Ups<br>&#8211; Infrastructure Development<\/p><li style=\"list-style-type: none\"><h3>What is the importance of NBFCs in economic growth?<\/h3><p class=\"saswp-faq-answer-text\">The importance of NBFCs in economic growth is as follows:<br>&#8211; Promotes inclusive growth<br>&#8211; Enhancing Financial Market Stability<br>&#8211; Job Creation and Economic Development<br>&#8211; Mobilisation of Resources<\/p><li style=\"list-style-type: none\"><h3>Why are NBFCs thriving in India?<\/h3><p class=\"saswp-faq-answer-text\">Some of the reasons why NBFCs are thriving in India are as follows:<br>&#8211; Flexibility and innovations<br>&#8211; Credit Availability<br>&#8211; Technological Advancements<br>&#8211; Favourable Regulatory Environment<br>&#8211; Strong track record of gaining investor confidence<\/p><li style=\"list-style-type: none\"><h3>What is an NBFC?<\/h3><p class=\"saswp-faq-answer-text\">An NBFC, which stands for Non-Banking Financial Company, is a company registered under the Companies Act 1956 or 2013 to provide financial services like loans and credit facilities but does not hold a banking license, unlike a traditional bank.<\/p><li style=\"list-style-type: none\"><h3>How do NBFCs differ from banks?<\/h3><p class=\"saswp-faq-answer-text\">NBFCs, unlike a traditional bank does not require a banking license, it does not accept deposits, and have a more flexible regulatory framework as compared to the traditional banks.<\/p><\/ul><\/div>\n\n\n<p><strong>Read more &#8211; <a href=\"https:\/\/corpbiz.io\/learning\/rbi-regulation-for-nbfc-license\/\">Understanding RBI Regulation for NBFC License<\/a><\/strong><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Non-banking Financial Companies (NBFCs) play a crucial role in the evolving landscape of the financial ecosystem in India. It provides essential financial services that contribute to economic growth. Over time, NBFCs have evolved, boosting the Indian economy, especially in bridging the credit gap for underserved segments of society. Unlike traditional banks, NBFCs offer a wide [&hellip;]<\/p>\n","protected":false},"author":84,"featured_media":69497,"comment_status":"closed","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[91],"tags":[],"acf":{"service_id":"8"},"authorName":"Ishan Joshi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2020\/03\/fav.png","authorDescription":"Ishan Joshi is an experienced writer with more than 7 years of proven expertise and 350+ blogs to his name. His write-ups are admired by CEOs and industry experts in the startup ecosystem. He wrote blogs for 10+ industries, including SaaS, LegalTech, FinTech, Hospitality, RegTech, Sustainability, Manufacturing, etc.","postViews":1225,"readingTime":8,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/69496"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/84"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=69496"}],"version-history":[{"count":3,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/69496\/revisions"}],"predecessor-version":[{"id":69500,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/69496\/revisions\/69500"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/69497"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=69496"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=69496"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=69496"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}