{"id":10976,"date":"2020-06-10T15:18:53","date_gmt":"2020-06-10T09:48:53","guid":{"rendered":"https:\/\/swaritadvisors.com\/learning\/?p=10976"},"modified":"2020-06-15T12:54:51","modified_gmt":"2020-06-15T07:24:51","slug":"nbfc-vs-banks-the-best-option-for-getting-loans-in-india","status":"publish","type":"post","link":"https:\/\/swaritadvisors.com\/learning\/nbfc-vs-banks-the-best-option-for-getting-loans-in-india\/","title":{"rendered":"NBFC vs Banks: The Best Option for Getting Loans in India"},"content":{"rendered":"\n<p class=\"has-drop-cap\">NBFC vs Banks: A person or business venture may require financial assistance at an important stage of their personal or professional life. The Indian banking and financial sector has played an essential role in streamlining credit for the masses. The traditional banking sector ruled the lending sector in India for more than decades. A majority of the general public was unsure about availing credit, both secured and unsecured, but found a reliable source of finance in banks. However, conventional banks have recently found a strong competition in Non-Banking Financial Companies (NBFCs). This guide lays down in detail, the <a rel=\"noreferrer noopener\" aria-label=\"difference between Banks vs NBFC (opens in a new tab)\" href=\"https:\/\/swaritadvisors.com\/learning\/banks-vs-nbfcs\/\" target=\"_blank\"><strong>difference between Banks vs NBFCs<\/strong><\/a> in India and which option is best for getting loans.<\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_65 counter-hierarchy ez-toc-counter ez-toc-light-blue ez-toc-container-direction\">\n<p class=\"ez-toc-title\">Table of Contents<\/p>\n<label for=\"ez-toc-cssicon-toggle-item-6a3a61fdcd9e6\" class=\"ez-toc-cssicon-toggle-label\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/label><input type=\"checkbox\"  id=\"ez-toc-cssicon-toggle-item-6a3a61fdcd9e6\"  aria-label=\"Toggle\" \/><nav><ul class='ez-toc-list ez-toc-list-level-1 ' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-vs-banks-the-best-option-for-getting-loans-in-india\/#Meaning_of_NBFC_vs_Banks\" title=\"Meaning of NBFC vs Banks\">Meaning of NBFC vs Banks<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-vs-banks-the-best-option-for-getting-loans-in-india\/#Meaning_of_Banks\" title=\"Meaning of Banks\">Meaning of Banks<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-vs-banks-the-best-option-for-getting-loans-in-india\/#Meaning_of_Non-Banking_Financial_Company_NBFC\" title=\"Meaning of Non-Banking Financial\nCompany (NBFC)\">Meaning of Non-Banking Financial\nCompany (NBFC)<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-vs-banks-the-best-option-for-getting-loans-in-india\/#Difference_Between_NBFC_vs_Banks_in_India\" title=\"Difference Between NBFC vs Banks in India\">Difference Between NBFC vs Banks in India<\/a><ul class='ez-toc-list-level-3' ><li class='ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-vs-banks-the-best-option-for-getting-loans-in-india\/#Activities_of_NBFC_vs_Banks\" title=\"Activities of NBFC vs Banks\">Activities of NBFC vs Banks<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-vs-banks-the-best-option-for-getting-loans-in-india\/#Rate_of_Interest\" title=\"Rate of Interest\">Rate of Interest<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-7\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-vs-banks-the-best-option-for-getting-loans-in-india\/#Eligibility_for_Loans_from_NBFC_vs_Banks\" title=\"Eligibility for Loans from NBFC vs\nBanks\">Eligibility for Loans from NBFC vs\nBanks<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-8\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-vs-banks-the-best-option-for-getting-loans-in-india\/#Dealing_in_Negotiable_Instruments\" title=\"Dealing in Negotiable Instruments\">Dealing in Negotiable Instruments<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-9\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-vs-banks-the-best-option-for-getting-loans-in-india\/#Documentation_for_Loan_Processing_in_NBFC_vs_Banks\" title=\"Documentation for Loan Processing in\nNBFC vs Banks\">Documentation for Loan Processing in\nNBFC vs Banks<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-10\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-vs-banks-the-best-option-for-getting-loans-in-india\/#Requirements_of_Credit_History\" title=\"Requirements of Credit History\">Requirements of Credit History<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-11\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-vs-banks-the-best-option-for-getting-loans-in-india\/#Permission_to_Accept_Deposits\" title=\"Permission to Accept Deposits\">Permission to Accept Deposits<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-12\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-vs-banks-the-best-option-for-getting-loans-in-india\/#Insurance_Protection_on_Deposits\" title=\"Insurance Protection on Deposits\">Insurance Protection on Deposits<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-13\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-vs-banks-the-best-option-for-getting-loans-in-india\/#Customised_Loan_Products\" title=\"Customised Loan Products\">Customised Loan Products<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-14\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-vs-banks-the-best-option-for-getting-loans-in-india\/#Loan_Processing_Time_and_Process\" title=\"Loan Processing Time and Process\">Loan Processing Time and Process<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-15\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-vs-banks-the-best-option-for-getting-loans-in-india\/#Customer_Services_and_Grievance_Redressal\" title=\"Customer Services and Grievance\nRedressal\">Customer Services and Grievance\nRedressal<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-3'><a class=\"ez-toc-link ez-toc-heading-16\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-vs-banks-the-best-option-for-getting-loans-in-india\/#Basic_Differences_Between_NBFC_vs_Banks\" title=\"Basic Differences Between NBFC vs\nBanks\">Basic Differences Between NBFC vs\nBanks<\/a><\/li><\/ul><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-17\" href=\"https:\/\/swaritadvisors.com\/learning\/nbfc-vs-banks-the-best-option-for-getting-loans-in-india\/#Concluding_the_Debate_of_Banks_vs_NBFCs\" title=\"Concluding the Debate of Banks vs NBFCs\">Concluding the Debate of Banks vs NBFCs<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Meaning_of_NBFC_vs_Banks\"><\/span>Meaning of NBFC vs Banks<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Meaning_of_Banks\"><\/span>Meaning of Banks<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Banks are financial institutions which are authorised\nby the government to execute banking activity such as acceptance of public\ndeposits, granting of loans, management of withdrawals, cheque issue and other financial\nutility services to bank account holders. <\/p>\n\n\n\n<p>Banks are considered as a focal point of any country\u2019s\neconomy that boost its fiscal growth. Banks guide and dominate the holistic\nfinancial segment of a country and act as financial intermediaries. They are\nthe nexus that connect borrowers and depositors. <\/p>\n\n\n\n<p>The Indian banking institutions comprise of public,\nprivate or foreign banks that operate in the country. They are also engaged in\nactivities such as granting of loans, maintaining the credit flow, mobilising deposits,\nsecure and time-specific money transfers, and much more. They also provide\npublic utility services, net banking services and mobile banking services,\nmaking it easier for their users to move towards a cashless and digital India.\nThe ownership of banks is in the hands of their shareholders and they\nprofit-earning institutions. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Meaning_of_Non-Banking_Financial_Company_NBFC\"><\/span>Meaning of Non-Banking Financial\nCompany (NBFC)<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>NBFC or a Non-Banking Financial Company is a financial\ninstitution which is involved in private lending to individuals and businesses.\nAn NBFC is a kind of company which is registered under the Companies Act, 2013\nand licensed and regulated by the Reserve Bank of India (RBI).<\/p>\n\n\n\n<p>NBFCs are not banking institutions but are engaged in lending activities to individuals and enterprises as per the limitations and guidance provided by the RBI. There are many similarities between the functioning of NBFC vs Banks since they both are engaged in providing loans and advances, savings, credit assistance, etc.<\/p>\n\n\n\n<p>NBFCs are also engaged in providing financial services\nto businesses for their acquisition of securities, shares, stocks, debentures\nand bonds which are issued by the government. NBFCs in India also provide services\nfor hire purchase, venture capital finance, insurance, leasing, and housing\nfinance.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Difference_Between_NBFC_vs_Banks_in_India\"><\/span>Difference Between NBFC vs Banks in India<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Though the activities of NBFCs and Banks are somewhat similar, there is a vast difference between their activities, legal obligations, manner of functioning, and much more. Let\u2019s have a look at NBFC vs Banks:<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Activities_of_NBFC_vs_Banks\"><\/span>Activities of NBFC vs Banks<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The Reserve Bank of India has classified the\nactivities which can be undertaken by the NBFCs. The activities of Non-Banking\nFinancial Companies or NBFCs are different from Banks in the following ways:<\/p>\n\n\n\n<ol><li>NBFCs are not allowed\nto accept demand deposits like banks.<\/li><li>NBFCs cannot be a\npart of any payment or settlement system.<\/li><li>NBFCs cannot issue or\ndraw cheques on themselves.<\/li><li>NBFCs cannot provide\ninsurance to the deposits and credit guarantee to its customers.<\/li><\/ol>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Rate_of_Interest\"><\/span>Rate of Interest<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Banks cannot extend credit low the Marginal Cost of\nfunds based Lending Rate or MCLR. Loans provided by banks are also associated\nwith certain macro-economic factors, including the lending rates prescribed by\nthe RBI, international market scenarios, etc. <\/p>\n\n\n\n<p>However, the rate of interest charged by NBFCs is\nbased on the Prime Lending Rate (PLR). The Reserve Bank of India does not\nregulate the rates charged by NBFCs on their loan products. Rather a limit is\nprescribed within which NBFCs can charge any rate from their customers.<\/p>\n\n\n\n<p>This provides NBFCs with the freedom to increase or\nreduce rates of interest on their different loan products to attract a larger\ncustomer base. This also benefits the borrowers since NBFCs offer flexible loan\ntenures and interest rates to their customers.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Eligibility_for_Loans_from_NBFC_vs_Banks\"><\/span>Eligibility for Loans from NBFC vs\nBanks<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Banks and NBFCs apply different eligibility and risk\nassessment parameters to accept any loan applications. It is found that banks\nhave stricter eligibility requirements as compared to NBFCs and offer a limited\namount of loans to their customers. <\/p>\n\n\n\n<p><em>Banks only offer financial assistance for a certain portion of the credit requirement, while NBFCs extend loans for almost the full amount of credit needs of their clients. For instance, in case of car loans, most banks only offer 70-75% of the car\u2019s value as loan, while most NBFCs extend 90-100% of the market price of the car.<\/em><\/p>\n\n\n\n<p><div class=\"shadow5\">Also, banks apply stringent demographic requirements\nto accept any individual or business as their customers. This includes\ncustomers belonging to the urban and metropolitan regions, customers who are up\nto a certain age, with a certain income level. However, the credit eligibility\nrequirements by NBFCs are more lenient, and they tend to target customers even\nfrom the rural and urban regions, with limited disposable income, and no credit\nhistory.<\/div><\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Dealing_in_Negotiable_Instruments\"><\/span>Dealing in Negotiable Instruments<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Negotiable instruments include bills of exchange,\ncheques, demand drafts, etc. Banks are allowed to issue and accept such\nnegotiable instruments and allow their customers to withdraw money from themselves\nand other banks as well. However, Non-Banking Financial Companies are not\nallowed to deal in any form of negotiable instruments.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Documentation_for_Loan_Processing_in_NBFC_vs_Banks\"><\/span>Documentation for Loan Processing in\nNBFC vs Banks<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Banks have strict requirements for detailed paperwork\nand document verification before any kind of loan, secured or unsecured, is\ngranted to a customer. Most Banks still rely on manual document verification,\nand this extends the turnaround time taken to process a loan. <\/p>\n\n\n\n<p>On the other hand, NBFCs have simple KYC and AML documentation\nrequirements, which is also processed digitally by a majority of NBFCs in\nIndia. NBFCs allow their customers to submit their loan documents online\nwithout the need to visit the brick-and-mortar store and even disburse and\ncollect the loan amount digitally with lesser paperwork as compared with banks.\nThis also reduces the loan processing and disbursement time by a significant\nmargin than banking institutions in India.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Requirements_of_Credit_History\"><\/span>Requirements of Credit History<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Indian banks rely on a detailed credit history of a\nloan applicant to assess if the person or business is worthy to receive\nfinancial assistance. This, in turn, leads to the exclusion of a large number\nof credit-wanting entities who do not possess an elaborate credit background or\nare first-time loan applicants.<\/p>\n\n\n\n<p>Conversely, NBFCs may offer loans, be it for personal\nor business purposes, even when the applicant does not have a good credit score\nor even no credit history at all. However, while doing so, NBFCs must ensure\nthat they have a strong default management strategy and risk management policy\nin order to mitigate any chances of Non-Performing Assets.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Permission_to_Accept_Deposits\"><\/span>Permission to Accept Deposits<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Banks are allowed to accept all kinds of deposits from\ntheir customers, including demand deposits. They are allowed to accept fixed\ndeposits, recurring deposits, and time-bound deposits. However, NBFCs in India\nare not allowed to accept demand deposits from their customers. NBFCs can only\naccept deposits after obtaining a special permission from the RBI and\nregulating such deposits as per the Master Directors of the RBI. <\/p>\n\n\n\n<p>NBFCs in India are allowed to accept deposits for a\nminimum period of 1 year and a maximum period of 5 years. Also, NBFCs cannot\naccept deposits which are repayable on demand. They also cannot offer interest\nrates more than the ceiling rate laid down and as revised by the RBI.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Insurance_Protection_on_Deposits\"><\/span>Insurance Protection on Deposits<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Deposits by banks are protected by insurance up to a\ngiven limit mandatorily. The bank deposits are insured with the Deposit\nInsurance Credit Guarantee Corporation. However, no such insurance protection\nis provided for the deposits by deposit-taking NBFCs in India.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Customised_Loan_Products\"><\/span>Customised Loan Products<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Loan products offered by banks are fixed and do not\noffer any tailor-made benefits to the customers. The features of the bank loans\nare fixed, with little to no room for customisation. However, NBFCs offer\ncustomised loan products to match the needs of their customers. They offer\nflexible interest rates, choice of repayment tenure, repayment mode and many\nother offers and discounts.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Loan_Processing_Time_and_Process\"><\/span>Loan Processing Time and Process<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>The time taken by banks to process is more than the time\ntaken by NBFCs for their loan applicant processing. This is because of the\nstrict verification parameters and manual procedures. On the other hand, most\nNBFCs operate a hybrid business model, allowing them to process the loan\napplications received online. The digital loan process also allows a faster disbursement\nof the loan amount.<\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Customer_Services_and_Grievance_Redressal\"><\/span>Customer Services and Grievance\nRedressal<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<p>Financial services are one of the most commonly\navailed services by the general public. However, banks and NBFCs may find\nthemselves in a legal conundrum of they do not provide quality financial\nservices and customer grievance redressal services. &nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp; The biggest concern for customers is the post-loan services\nprovided by banks. Most customers complain about the lack of customer support services\nonce the loan is sanctioned. <\/p>\n\n\n\n<p>However, in case of NBFCs, customers find end-to-end\nservices for their loan application processing, disbursements, EMI tracking,\netc. Most NBFCs also have multiple channels of communication as well, including\nsocial media, telephonic and SMS connectivity, email assistance, live chat,\netc. <\/p>\n\n\n\n<h3 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Basic_Differences_Between_NBFC_vs_Banks\"><\/span>Basic Differences Between NBFC vs\nBanks<span class=\"ez-toc-section-end\"><\/span><\/h3>\n\n\n\n<table class=\"wp-block-table\"><tbody><tr><td>\n  <strong>Ground<\/strong>\n  <\/td><td>\n  <strong>Banks<\/strong>\n  <\/td><td>\n  <strong>NBFC<\/strong>\n  <\/td><\/tr><tr><td>\n  <strong>Meaning<\/strong><strong><\/strong>\n  <\/td><td>\n  It is a\n  government organisation that provides banking services to the general public.\n  <\/td><td>\n  It is a private\n  company that provides services similar to banking services, with certain\n  exceptions.\n  <\/td><\/tr><tr><td>\n  <strong>Registered under<\/strong>\n  <\/td><td>\n  Bank registration is done under the Banking Regulation\n  Act, 1949.\n  <\/td><td>   <a rel=\"noreferrer noopener\" aria-label=\"NBFC registration in India (opens in a new tab)\" href=\"https:\/\/swaritadvisors.com\/nbfc-registration\" target=\"_blank\"><strong>NBFC registration in India<\/strong><\/a> is done under the   Companies Act, 2013, with a license to operate as NBFC from the RBI under the   RBI Act.   <\/td><\/tr><tr><td>\n  <strong>Deposit<\/strong><strong><\/strong>\n  <\/td><td>\n  Banks can\n  accept and issue deposits on demand of the customer.\n  <\/td><td>\n  NBFCs cannot\n  accept or issue demand deposits.\n  <\/td><\/tr><tr><td>\n  <strong>FDI<\/strong>\n  <\/td><td>\n  FDI in banks is allowed only to a certain limit.\n  <\/td><td>\n  FDI in NBFCs is allowed at 100%.\n  <\/td><\/tr><tr><td>\n  <strong>Payments<\/strong><strong><\/strong>\n  <\/td><td>\n  Payments system\n  is a part of the banks in India. \n  <\/td><td>\n  NBFCs cannot\n  have a payment system.\n  <\/td><\/tr><tr><td>\n  <strong>Transactions<\/strong>\n  <\/td><td>\n  Banks provide assorted transaction services to their\n  customers.\n  <\/td><td>\n  NBFCs cannot have a transaction system.\n  <\/td><\/tr><tr><td><\/td><td><\/td><td><\/td><td><\/td><\/tr><\/tbody><\/table>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Concluding_the_Debate_of_Banks_vs_NBFCs\"><\/span><strong>Concluding the Debate of Banks vs NBFCs<\/strong><span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The\nentry of NBFCs in the lending sector turned the credit ecosystem upside-down by\nserving those who were considered as undeserving by the banks. NBFCs are providing\ncredit in a more expeditious and cost-efficient manner as compared to the\nbanking institutions in India.<\/p>\n\n\n\n<p>The\nbanking sector has failed to address a large section of credit-wanting\nindividuals and businesses that reside in the semi-urban and rural cities.\nBanking institutions in India extend the limited scope of services to an\nexclusive market segment. <\/p>\n\n\n\n<p>The\ngrowth in the banking industry has also declined due to the increased\nnon-performing assets (NPAs). On the other hand, the NBFCs are witnessing a\ngrowth spurt resulting from the inclusive approach they follow while extending\ntheir financial services. NBFCs also have superior risk management and planning\nstrategy in place. NBFCs have proven to have a higher performance level when it\ncomes to surviving the liquidity-crippled market and run scalable business\noperations while providing peerless services.<\/p>\n\n\n\n<p>The\nNBFCs work parallel to the numerous government initiatives such as the National\nRural Financial Inclusion Plan. They supply customised financial services as\nper the demands of businesses and income-earning individual. NBFCs have proven\nto be a worthy competition to banks by providing their clients with a financial\nsafety net needed to grow in a severely competitive market. <\/p>\n\n\n\n<p>NBFC\nplayers have established a more approachable and inclusive financial model\nwherein the credit requirements of those who were excluded under the banking\nsystem are able to access affordable credit assistance. NBFCs have also played\na crucial role in the increase in employment opportunities in India. <\/p>\n\n\n\n<p>NBFCs,\ntherefore, are playing a key role in extending financial assistance to MSME\nbusinesses and providing them with the capital assistance they need to expand.\nWith their customisable loan products, hybrid business operations and state-of-the-art\ntechnologies, NBFCs have been giving tough competition to the existing banking\nsector and contributing significantly to the economic growth of the country.<\/p>\n\n\n\n<p>Swarit Advisors can assist you with your NBFC registration, NBFC post-registration compliances, and <a rel=\"noreferrer noopener\" aria-label=\"NBFC collaborations in India (opens in a new tab)\" href=\"https:\/\/swaritadvisors.com\/nbfc-collaboration\" target=\"_blank\"><strong>NBFC collaborations in India<\/strong><\/a>. Consult our NBFC experts to understand and execute your NBFC registration strategy effortlessly.<\/p>\n\n\n\n<p class=\"text-left\"><b>Also, Read<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/swaritadvisors.com\/learning\/banks-vs-nbfcs\/\">Difference Between Banks v\/s NBFCs<\/a><\/mark><\/p>\n","protected":false},"excerpt":{"rendered":"<p>NBFC vs Banks: A person or business venture may require financial assistance at an important stage of their personal or professional life. The Indian banking and financial sector has played an essential role in streamlining credit for the masses. The traditional banking sector ruled the lending sector in India for more than decades. A majority [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":10991,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":[],"categories":[89,544],"tags":[],"_links":{"self":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/10976"}],"collection":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/comments?post=10976"}],"version-history":[{"count":12,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/10976\/revisions"}],"predecessor-version":[{"id":11032,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/posts\/10976\/revisions\/11032"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media\/10991"}],"wp:attachment":[{"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/media?parent=10976"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/categories?post=10976"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/swaritadvisors.com\/learning\/wp-json\/wp\/v2\/tags?post=10976"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}