Most of us have grown up with one belief - if you need a loan or want to save money, you go to a bank. But over the last decade, millions of Indians have been quietly borrowing from a different kind of institution, one that works a lot like a bank but technically is not one. These are called NBFCs, or Non-Banking Financial Companies.
So, what sets them apart? And which one should you turn to when you need money?
What Is a Bank?
A bank is a government-regulated institution where people keep their money and take loans. It offers services like savings accounts, current accounts, UPI, cheque payments, and online transfers. Banks in India are governed by the Banking Regulation Act, 1949 and are supervised by the Reserve Bank of India (RBI).
What Is an NBFC?
An NBFC (Non-Banking Financial Company) is a financial company that provides loans and other financial services, similar to banks. However, there are some significant differences worth knowing so keep reading and find out.
The Key Differences
-
Deposits
Banks can accept demand deposits (money you withdraw anytime). NBFCs generally cannot. Some deposit-taking NBFCs can accept fixed deposits, but only under strict RBI conditions.
-
Deposit Insurance
Bank deposits are insured up to ₹5 lakh per depositor by the DICGC. NBFC deposits carry no such protection. This is a real risk worth knowing.
-
Regulation
Both are regulated by the RBI, but the intensity differs. Since October 2021, NBFCs follow a Scale-Based Regulation (SBR) framework (four tiers based on size and risk). The larger the NBFC, the stricter the oversight, bringing it closer to bank-level compliance.
-
Ease of Credit
This is where NBFCs genuinely stand out. Banks have rigid criteria such as high credit scores, verified income proof, collateral requirements, and weeks of processing time. NBFCs offer more flexible eligibility, faster approvals, and lighter documentation. As the RBI acknowledges, NBFCs are instrumental in bridging the credit gap for self-employed individuals and small businesses that traditional banks often overlook.
One Thing to Always Check
Before borrowing from any NBFC, verify that it holds a Certificate of Registration (CoR) from the RBI. You can check this on www.rbi.org.in. Also read the interest rate terms carefully, since NBFCs take on higher-risk borrowers, their rates can run higher than those of banks.
If you are looking for a Loan Against Property in Mumbai, Pune, or Surat, Ramkrishna Pure Finance (RKPF) is an RBI-registered NBFC based in BKC, Mumbai. We specialise in Loan Against Property solutions built on transparency and long-term client relationships. Sometimes the right financial partner is not the biggest one. It is the one that understands your needs.
Disclaimer: Loans are subject to credit appraisal, eligibility criteria, and applicable terms and conditions. Interest rates and loan terms may vary based on individual assessment. Please read all loan documents carefully before proceeding.