What is NBFC? Types And Best Finance Company In India

In this article, I have to cover important questions relating to Non-Banking Financial Companies (NBFC) in question-and-answer mode. I hope you increase your knowledge by reading this article. The article explains What is a Non-Banking Financial Company (NBFC), whether Are there types of Non-Banking Financial Companies, and other more knowledgeable things. 

NBFCs are regulated by the Reserve Bank Of India (RBI) and the Securities and Exchange Board of India (SEBI) in India. NBFCs are essential as they fulfill the financial needs of individuals and businesses. They play a crucial role in the financial sector. They help in the loan process.

What is NBFC? Types And Best Finance Company In India
What is NBFC? Types And Best Finance Company In India

What Is a Non-Banking Financial Company?

A Non-Banking Financial Company (NBFC) is a company registered under the Companies Act, 1956 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 or providing any services and sale/purchase/construction of the immovable property.

NBFCs are financial institutions that provide various financial services and products, including loans, insurance, and asset management but do not have a banking license. Unlike banks, NBFCs do not have the authority to accept deposits from the public. However, they can accept deposits from a select group of individuals, such as directors, shareholders, and relatives.

What Are The Benefits Of Using An NBFC?

There are several benefits of using an NBFC over a bank, these include:

NBFCs can lend money to people who may not be eligible for a loan from a bank. This could be due to factors such as poor credit history or insufficient collateral.

NBFCs are often quicker and easier to deal with than banks. They may have fewer branches, but this can make them more accessible to customers.

NBFCs are not subject to Reserve Bank of India (RBI) guidelines, meaning they have more freedom to set their own lending rates. This can make them more competitive than banks.

NBFC Rules Change

In the 1960s, deposits of many people in NBFCs. The Reserve Bank of India (RBI) started monitoring NBFCs in 1963 and started making many new rules. Insurance companies also come within the NBFC companies. Insurance Regulatory and Development Authority (IRDA) regulates the NBFCs operating in the insurance sector.

Non-Banking Financial Companies (NBFC) are working in India and other countries. Such companies are called shadow banking systems in the world. This is why they borrow from banks and raise their funds through non-convertible debentures (NCDs) and commercial papers.

Types of NBFCs

Types of Non-Banking Financial Companies (NBFC) in India regulated by the Reserve Bank of India (RBI) within these broad categories:-

Investment Company (IC)

IC means any company which is a financial institution carrying on as its principal business the acquisition of securities.

Loan Companies (LC)

Loan Companies provide finance to the public, whether by making loans or advances. It does not include an equipment leasing company or a hire-purchase, Asset Finance company.

Infrastructure Finance Company (IFC)

IFC is a non-banking finance company a that deploys at least 75% of its total assets in infrastructure loans, b has a minimum Net Owned Funds of ₹ 300 crores, c) has a minimum credit rating of ‘A ‘or equivalent d) and a CRAR of 15%.

Top 6 NBFC In India 2023

Bajaj Finance Limited

Bajaj Finance Limited offers a variety of loans including personal loans, home loans, car loans, and business loans. The company also provides credit cards, investment products, and insurance products. Bajaj Finance Limited has a wide network of branches across India and offers online banking services.

With a strong presence in both urban and rural areas, Bajaj Finserv has become a household name, synonymous with trust and reliability. This NBFC has consistently ranked among the top 10 non-banking finance companies in India and is expected to maintain its position in 2023 and beyond.

Aditya Birla Financial

Aditya Birla Financial Services includes Aditya Birla Finance Limited. It was founded in 1991 and provides exact and specialized solutions in capital markets, structured finance, corporate finance, and commercial mortgages.  Aditya Birla Capital continues to expand its product portfolio, invest in digital capabilities, and enhance its customer experience to further strengthen its position as a leading NBFC in India.

Aditya Birla Capital is a prominent non-banking financial company (NBFC) in India, providing a diverse range of financial services including lending, insurance, wealth management, and asset management. The company has a strong presence across India, with over 700 branches and 135,000 distribution partners.

Tata Capital Financial Services Limited

Tata Capital Financial Services Limited is a leading Non-Banking Financial Company (NBFC) in India. The company offers a wide range of financial products and services to individuals, corporates, and SMEs.

It is a division of Tata Capital Ltd. to name one of its subsidiaries. Financial services are provided by the firm. The business provides consumer loans, wealth management services, and commercial and infrastructure financing. India’s retail, corporate, and institutional clients are all served by Tata Capital Financial Services. In Mumbai, Maharashtra, the business is located. One of India’s top ten financial institutions is this one.

L&T Finance Holdings Limited

L&T Finance Holdings Limited is one of the leading non-banking financial companies (NBFC) in India. It is a part of the Larsen & Toubro Group, one of the largest engineering and construction firms in India.

L&T Finance Holdings Limited offers a wide range of financial products and services to its customers, including loans, investments, insurance, and deposit products.

The company’s financial performance has been consistently impressive, which has earned it the respect and admiration of analysts and investors alike. L&T Finance Holdings Limited’s commitment to delivering value to its customers and shareholders, coupled with its strong financials, has contributed to its positive reputation in the market.

Mahindra & Mahindra Financial Services Limited

Mahindra & Mahindra Financial Services Limited is an Indian multinational banking and financial services company headquartered in Mumbai, Maharashtra. It is a subsidiary of the Mahindra Group, one of India’s largest business conglomerates. The company offers a range of banking and financial products and services including deposits, loans, credit cards, insurance, investments, and wealth management.

MMFSL’s focus on serving the rural and semi-urban areas has helped it establish a loyal customer base, as it offers customized financial solutions that cater to the specific needs of its customers. Additionally, the company has placed a strong emphasis on digital initiatives to improve operational efficiency and enhance the customer experience.

Top 20 Best Finance Company In India 2023

Reliance Capital Limited

Reliance Capital Limited is one of the largest non-banking financial companies (NBFCs) in India. It is a part of the Reliance Group and offers a range of financial products and services to retail, corporate, and institutional customers.

Reliance Industries was created in the 1960s by Dhirubhai Ambani and Champaklal Damani. In addition to operating in the fields of energy, petrochemicals, textiles, natural resources, and retail, Reliance also owns telecommunications firms and retail locations throughout India. As of March 31, 2018, the company had total assets of Rs. 1,61,173 crore (US$ 24.4 billion) and a net worth of Rs. 14,074 crore (US$ 2.1 billion).


What is NBFC?

NBFC or Non-Banking Financial Company is a financial institution that provides banking services without requiring to hold a bank license. NBFC is a company registered under the Companies Act, and regulated by RBI.

What Is a Non-Financial Banking Company?

A company that does the work of accepting deposits and giving loans like a bank but is not a bank is called a non-financial company.

Is it good to invest in NBFC?

NBFC fixed deposits with ratings of AAA from CRISIL and ICRA are considered the safest deposits. It is best to select NBFCs with a strong reputation and high safety ratings when saving with fixed deposits.

What are the new rules for NBFC?

NBFCs are required to hold a 0.25% reserve. for outstanding loans on personal home loans and loans to small and micro businesses.

Who are eligible for NBFC?

It should be a company registered under the Companies Act, of 1956. It should have a minimum net-owned fund of ₹ 200 lacks. NBFC-Factors, CICs is different as it is decided on the kind of NBFC, it is desired to be registered.

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