A Non-Banking Financial Company (NBFC) is a company engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property.
Non Banking Financial Institutions act as backup facilities in case banking intermediaries fail to support the people within economy. These financial intermediaries play a vital role in the country’s economic development by contributing to employment generation, credit facilitation, transportation, wealth creation in rural areas, and providing financial assistance and guidance during emergencies, including insurance matters.
NBFIs supplement banks in providing financial services to individuals and firms. They can provide competition for banks in the provision of these services. While banks may offer a set of financial services as a package deal, NBFIs unbundle these services, tailoring their services to particular groups. Additionally, individual NBFIs may specialize in a particular sector, gaining an informational advantage. By this unbundling, targeting, and specializing, NBFIs promote competition within the financial services industry.
The scope of NBFCs is vast and growing, given the increasing demand for credit and financial services. They offer a wide range of financial products and services, such as Personal Loans, Business Loans, Vehicle Loans, Loan Against Property, and other credit facilities.
These are included in our focus area so to keep the economies growing at a rapid rate as Banks may have some limitations to keep all sectors in their vision but NBFIs on the other hand have in-depth reach to the customers as well to all the sectors of economy.
