NBFC

Full form: Non-Banking Financial Company

Banking

NBFCs offer banking-like services (loans, asset finance) without a banking licence. Regulated by RBI. Examples: Bajaj Finance, Muthoot Finance, Mahindra Finance. Cannot accept demand deposits.

In detail

NBFCs serve segments underserved by banks: self-employed, lower credit scores, rural areas. Interest rates typically 1-4% higher than banks. NBFC deposits not covered by DICGC insurance -- stick to AAA-rated ones.

Real-life example

🇮🇳 India example

Suresh (self-employed) rejected by SBI for business loan (insufficient ITR). Bajaj Finance approves at 18% vs SBI's 12% -- access to capital he couldn't get otherwise.

Frequently asked questions

Are NBFC deposits safe? ▼

Not DICGC insured. Stick to AAA-rated NBFCs and diversify across multiple. Bank FDs are safer.