NBFCs are companies registered under the Companies Act that engage in financial activities — loans, investments, asset financing, insurance — but are not banks. They cannot accept demand deposits (savings/current accounts) but can accept fixed deposits.
NBFCs play a crucial role in India’s credit system, especially for underserved segments — MSMEs, self-employed, and borrowers in smaller cities. They often have more flexible eligibility criteria than banks but may charge slightly higher rates. Major NBFCs include Bajaj Finance, Piramal Capital, PNB Housing, and others. Housing Finance Companies (HFCs) are a sub-category focused on home loans.
Since 2020, RBI has progressively tightened NBFC regulations, bringing them closer to banking standards for consumer protection and risk management.
NBFCs are major lending partners especially for MSME and self-employed borrowers. Understanding their role, advantages, and differences from banks helps borrowers make better lender choices.
Nihal Fintech partners with both banks and NBFCs, giving clients access to a wider range of products. We help clients choose between bank and NBFC options based on eligibility, rates, and flexibility.
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