Non-banking financial institutions (NBFIs) are financial institutions that offer banking services like loans and credit facilities but do not have a banking license. They are registered as companies under Indian law and regulated by the Reserve Bank of India. NBFIs generally cannot take traditional demand deposits from the public. However, they can offer other services such as currency exchange, money markets, retirement planning, underwriting, and mergers. NBFIs help various sectors of the economy by providing liquidity and reducing risks through the investment of funds.

1. NON BANKING FINANCIAL INSTITUTIONS
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2. NON BANKING FINANCIAL INSTITUTIONS
• 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, 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..
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3. NON BANKING FINANCIAL INSTITUTIONS
• Nonbank financial companies (NBFCs), also known as nonbank financial
institutions (NBFIs), are financial institutions that offer various banking services
but do not have a banking license.
• Generally, these institutions are not allowed to take traditional demand
deposits—readily available funds, such as those in checking or savings accounts—
from the public. This limitation keeps them outside the scope of conventional
oversight from federal and state financial regulators.
• NBFCs can offer services such as loans and credit facilities, currency exchange,
retirement planning, money markets, underwriting, and merger activities.
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4. Role BANKING FINANCIAL INSTITUTIONS
• Help the Household Sector
• Help the Business Sector
• Help the State and Local Government
• Help the Central Government
• Lenders and NBFIs both Earn
• Provide Liquidity
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5. ROLE OFBANKING FINANCIAL INSTITUTIONS
• Low Interest Rates Benefit both Savers and Investors
• Reduce Risks
• Investment of Funds
• Create New Assets and Liabilities
• Bring Stability in the Capital Market
• Benefit to the Economy
• Help in the Growth Process of Economy
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6. Difference between NBFI and Bank
1. Meaning
2. Incorporated under
3. Demand Deposit
4. Foreign Investment
5. Payment and Settlement system
6. Maintenance of Reserve Ratios
7. Deposit insurance facility
8. Credit creation
9. Transaction services
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