NBFCs, or non-banking financial companies, are registered under the Companies Act and provide banking services without a bank license. Some major NBFCs operating in India include NABARD, Shriram Transport Finance, and LIC Housing Finance. NBFCs cannot accept demand deposits, issue checks, or offer deposit insurance. They also have more lenient loan conditions than banks but charge higher interest rates. The top 10 NBFCs in India are led by Reliance Capital, L&T Finance, and Mahindra Finance.

1. NON
BANKING
FINANCIAL
INSTITUTIONS

2. INTRODUCTION
 NBFC stands for Non-Banking Financial Company. In India,
NBFCs are registered under the Companies Act, 1956. The
number of non-banking financial companies has expanded
considerably after the industrial, retail and venture capital
companies entered the lending business.
 Some of the NBFCs operating in India are NABARD, PFCL,
Infrastructure Development Finance Company Limited, Shree
Global, Reliance Capital, Shriram Transport Finance, Muthoot
Finance, LIC Housing Finance and RECL.

3. FUNCTIONS OF NBFC’S
 Provides Banking services to People without holding a Bank license.
 An NBFC cannot accept Demand Deposits.
 An NBFC is not a part of the payment and settlement system and as such.
 An NBFC cannot issue Cheques drawn on itself.
 Deposit insurance facility of the Deposit Insurance and Credit Guarantee Corporation is not
available for NBFC depositors, unlike banks.
 An NBFC is not required to maintain Reserve Ratios (CRR, SLR etc.)
 An NBFC cannot indulge Primarily in Agricultural, Industrial Activity, Sale-Purchase,
Construction of Immovable Property.
 Foreign Investment allowed up to 100%.

4. TYPES OF NBFC’S IN INDIA AS RECOGNISED BY RBI

5. ADVANTAGES OF NBFC’S
 Lenient conditions for getting a loan in comparison to
traditional banks
 Approve smaller loan sizes
 Borrower evaluation based on known history of the
business

6. DISADVANTAGES OF NBFC’S
 An NBFC cannot accept demand deposits as it falls
within the realm of activity of commercial banks.
 An NBFC is not a part of the payment and settlement
system and as such an NBFC cannot issue cheques
drawn on itself.
 Deposit insurance facility of Deposit Insurance and
Credit Guarantee Corporation is not available for
NBFC depositors unlike in case of banks.

7. COMMERCIAL BANK V/S NBFC
Cheque can be issued Cheque can’t be issued
Less rate of interest High rate of interest
Regulated by BRA and
RBI
Regulated by SEBI,
companies Act, RBI etc
Hold a varieties of assets Hold one type of asset

8. TOP 10 NBFC IN INDIA
 RELIANCE CAPITAL
 L&T FINANCE LIMITED
 MAHINDRA & MAHINDRA FINANCIAL
SERVICES LIMITED (MMFSL)
 SUNDARAM FINANCE
 SHRIRAM TRANSPORT FINANCE COMPANY
LIMITED
 LIC HOUSING FINANCE LIMITED
 INDIABULLS HOUSING FINANCE LIMITED
 POWER FINANCE CORPORATION LIMITED
 BAJAJ FINSERV
 HDFC