NBFIs are non-banking financial institutions that are registered under the Companies Act and regulated by the RBI. They provide banking services like loans and deposits but do not accept demand deposits. NBFIs have more flexible regulations for foreign investment compared to banks. Banks are regulated under the Banking Regulation Act and are authorized to accept demand deposits and are part of the payment and settlement system. Some examples of large NBFIs in India are HDFC, Power Finance Corporation, Reliance Capital, and Muthoot Finance.

1. Difference Between
NBFI & Banks
Submitted by :- Sunny Mervyne Baa
Roll No 22
PGDM 16-18
Tri Sem II

2. What Is NBFI
• NBFC expands to Non-Banking Financial Company is a company
registered under the Companies Act, 1956 and regulated by the
Central Bank i.e. Reserve Bank of India under RBI Act, 1934.
These entities are not banks, but they are engaged in lending and
other activities, akin to that of banks like providing loans and
advances, credit facility, savings and investment products, trading
in the money market, managing portfolios of stocks, transfer of
money and so on.
• It is indulged in the activities of hire purchasing, leasing,
infrastructure finance, venture capital finance, housing finance, etc.
An NBFC accepts deposits, but only term deposits and deposits
repayable on demand are not accepted by it.
• In India, these companies emerged in the mid-1980’s. Kotak
Mahindra Finance, SBI Factors, Sundaram Finance, ICICI
Ventures are examples of popular NBFC’s.

3. NBFC is divided into three
categories,
Investment
Companies
Loan
Companies
Asset
Companies

4. What Is A Bank
• Banks are the financial institution, authorised by the government
to conduct banking activity like accepting deposits, granting
credit, managing withdrawals pay interest, clearing cheques and
providing general utility services to the customers. Banks are the
apex organisation, which dominates the entire financial system of
the country. It acts as a financial intermediary, between the
depositors and borrowers, that ensures smooth functioning of
the economy.
• Banks can be public sector banks, private sector banks or foreign
banks. They are responsible for making loans, creating credit,
mobilisation of deposits, safe and time bound transfer of money
and providing public utility services. Ownership of a commercial
bank lies with the shareholder and they are operated with the
profit motive.

5. Basic DIfference
NBFI
Bank

6. Meaning
An NBFC is a company
that provides banking
services to people without
holding a bank license.
Bank is a government
authorized financial
intermediary that aims at
providing banking services
to the general public.

7. Incorporated under
Companies
Act 1956
Banking
Regulation
Act, 1949

8. Demand Deposit
Not
Accepted
Accepted

9. Foreign Investment
Allowed up to
100%
Allowed up to
74% for private
sector banks

10. Payment and Settlement
system
Not a part of
system.
Integral part
of the system.

11. Maintenance of Reserve
Ratios
Not
required
Compulsory

12. Deposit insurance facility
Not
available
Available

13. Examples Of NBFC

14. • HDFC
• Although HDFC is into core banking however it also gives
Non Banking Financial Services like providing small loans
and other things like micro finance. HDFC keeps NBF
services separate from its core services.
• Establishing Year: 1977 by Hasmukhbhai Parekh
• Core Services: Mortgages, Life Insurance, Mutual Funds,
Micro Finance etc
• Total Assets: $3.44 Billion
• Employees and Operations: 2000+, All over India and
overseas
• Head Office: Mumbai
• Website: www.hdfc.com

15. • . Power Finance Corporation
• Power Finance corporation is financial backbone of power
sector. This company enjoys the status of Navratna
Company in India. It is an ISO certified company.
• Establishing Year: 1986
• Core Services: Financial Consulting, Investment Banking,
Loan Management etc
• Total Assets: $2.36 Billion
• Employees and Operations: 330 to 400, Operations
restricted to India only
• Head Office: New Delhi, India
• Website: www.pfcindia.com

16. • Reliance Capital
• Reliance Capital is among top 3 private financial services
and banking companies in terms of net worth. Reliance
Capital comes under the Anil Ambani Group.
• Establishing Year: 1986 by Dhirubhai Ambani
• Core Services: Asset Management, Insurance, Broking and
Distribution, Commercial Finance, Mutual Funds etc
• Total Assets: $1.1 Billion
• Employees and Operations: 11,000+ across all major
cities in India
• Head Office: Mumbai, India
• Website: www.reliancecapital.co.in

17. • Shree Global
• Shree Global is an iron manufacturing company but it is
also in the asset management business.
• Establishing Year: Incorporated in 1986
• Core Services: Iron and Steel and financial services
• Total Assets: Rs 847 Crore to Rs 900 Crore
• Employees and Operations: 2000 and operations in India
• Head Office: Mumbai, India
• Website: www.sgtl.in

18. • Muthoot Finance
• Muthoot Finance is one of the largest NBFC in India. It is
number one when it comes to selling gold coins.
• Establishing Year: 1939
• Core Services: Muthoot Finance includes small
businesses, vendors, farmers, traders, SME business
owners, and salaried individuals.
• Total Assets: Rs 23,000 Crores+
• Employees and Operations: 30,000+ with over 4,400
branches all over the country
• Head Office: Kochi, India
• Website: www.muthootfinance.com

19. • LIC Housing Finance
• LIC Housing Finance has provided financial assistance to
over 1 million house owners.
• Establishing Year: 19 June 1989
• Core Services: Real Estate and Housing Finance and
Loans
• Total Assets: Rs 500 Crore to Rs 600 Crore
• Employees and Operations: 1500 employees, with over
13 offices and 181 marketing units and 7 regional offices.
• Head Office: Mumbai, India
• Website: www. Lichfl.com

20. References
• http://keydifferences.com/difference-between-nbfc-and-
bank.html
• http://companiesinindia.in/non-banking-financial-
companies-in-india/