NBFC is the abbreviation for Non-Banking Financial Company that administers numerous financial and non-financial services to individuals, business enterprises, entrepreneurs, and others. NBFC is not the same as commercial banks and cooperative banks. It is required to follow the laws and commands implemented by RBI but does not need to secure a banking license. NBFCs function in the realm of industrial and commercial advances, insurance business, implements of the capital and money markets, investment funds, and further related ventures.
India's monetary division has recorded steady growth for the past two decades. And, it is a must to mention that the NBFC segment of this division has transfigured remarkably over the past few years. Moreover, in driving new credit disbursals for the country's underserved retail and MSME market, the NBFCs have played a crucial role in it.
The RBI u/s 45-IA of the RBI Act of 1934 grants the NBFC License. The financial organization must register itself either as per the Companies Act of 2013, or earlier Act of 1956 before applying for NBFC registration online with the affordable NBFC registration fees. RBI strictly monitors and guarantees that the NBFCs are complying with the stipulations and commands administered in Chapter III B of the RBI Act.
The fundamental business venture of NBFCs includes raising capital from the public depositors & investors and lending these further to the borrowers. NBFCs act as bridges to link the investors or depositors with the borrowers. They are considered a better option for the banking and business sector by contributing financial solutions to the unbanked and unorganized sections of the community.
It is to mark that the mentioned below activities are not reflected as financial in nature: