What is an NBFC and How It Differs from a Bank?
In India’s evolving financial space, NBFCs have become a major force, especially for people looking for loans, investments, or financing without going to a bank. But what exactly is an NBFC, and how is it different from a traditional bank?
What is an NBFC?
NBFC stands for Non-Banking Financial Company. It is a company registered under the Companies Act, 2013 and regulated by the Reserve Bank of India (RBI).
NBFCs offer services similar to banks, such as:
- Personal loans
- Vehicle loans
- Gold loans
- Asset financing
- Investment products
However, they do not accept demand deposits like savings or current accounts.
To explore which companies fall into this category, you can refer to the RBI Approved NBFC List in India 2025.
Key Differences Between NBFCs and Banks
| Feature | Banks | NBFCs |
|---|---|---|
| Regulation | RBI (Banking Regulation Act, 1949) | RBI (Companies Act, 2013) |
| Accept Deposits | Yes (savings, current) | No (except select deposit-taking NBFCs) |
| Issue Cheques | Yes | No |
| Payment System Access | Yes | No |
| Priority Sector Lending | Mandatory | Not applicable |
| Credit Creation | Yes | Limited |
Why Are NBFCs Gaining Popularity?
NBFCs are filling the gap left by traditional banks. They:
- Offer faster loan approvals
- Have relaxed eligibility for borrowers
- Focus on underserved segments
- Provide digital-first services
In recent years, NBFCs have become go-to institutions for personal loans, business finance, and rural credit.
If you want to see which are the most trusted companies in this space, check this List of NBFCs in India curated for 2025.
Types of NBFCs You Should Know
NBFCs are classified by RBI into several categories:
- NBFC-ICC (Investment and Credit Company)
- NBFC-MFI (Microfinance)
- NBFC-Factor (Bill discounting)
- Infrastructure Finance Companies
- Account Aggregators
- Core Investment Companies
Explore each type in our detailed guide on Types of RBI Registered NBFCs.
How to Check If an NBFC is Legit?
Before applying for any loan or investment product from an NBFC:
- Visit the official NBFC Bank List in India 2025
- Verify the company’s name and registration number
- Avoid unregistered or fraudulent firms
This small step protects you from fake finance companies and ensures a safe borrowing experience.
NBFCs are reshaping India’s financial future — especially for those beyond the reach of traditional banks. While they don’t offer all banking services, they provide more flexible and fast solutions.
Want to know which NBFCs are currently trusted by RBI? Check our latest RBI registered NBFC list to make smart and safe financial decisions.
Disclaimer: This post is for general informational purposes only. It does not constitute financial advice. Please consult a qualified professional before making financial decisions.
