What are Non-bank financial companies (NBFCs) ?
NBFCs have been divided into two categories.
- Non-banking financial companies, or NBFCs, are financial institutions that provide banking services, but do not hold a banking license.
- These institutions are not allowed to take deposits from the public depending on the jurisdiction. Nonetheless, all operations of these institutions are still covered under banking regulations.
- They do offer all sorts of banking services, such as loans and credit facilities, retirement planning, money markets, underwriting, and merger activites.
- The number of non-banking financial companies has expanded greatly in the last several years as venture capital companies, retail and industrial companies have entered the lending business.
- A company can only call itself a bank if it is a registered as such with the nation's central bank.
- 1. Category 'A' companies (NBFCs accepting public deposits or NBFCs-D)
- 2. Category 'B' companies (NBFCs not raising public deposits or NBFCs-ND
- These institutions typically are restricted from taking deposits from the public.