What is a NBFC and do they accept deposits?

What is a NBFC and do they accept deposits?

NBFC stands for Non Banking Financial Company, In a Layman language NBFC are financial institution that provide certain type of banking services but do not hold a Banking License.

According to Reserve bank of India, Certain functioning between NBFC & Banks does match but the difference between Banks and NBFC are:-

NBFCs lend and make investments and hence their activities are akin to that of banks; however there are a few differences as given below:

i. NBFC cannot accept demand deposits;

ii. NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself;

iii. deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks


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