A Non-banking Financial company(NBFC) is a company registered under the comapnies act, 1956 and is engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by government, but does not include any institution whose principal business is that of agriculture activity, industrial activity, sale/construction of immovable property.
The main difference between NBFCs and Bank are as follows,
(1) A NBFC cannot accept Demand deposits.
what is Demand deposits?
They are funds deposited at a depository institution that are payable on demand-immediately or within a very short period lik ur CA or SA (current or savings) account
(2) It does not accept cheque or DD.
(3) Deposit insurance facility of DICGC is not available for NBFC depositors unlike in case of banks.
(4) It also cannot transfer money from one account to another.
(5) Intra or inter banking facility cannot be done in NBFC.
They are simply financial institutions that provide
banking services, but do not hold a banking license. NBFCs do offer all sorts of
banking services, such as loans and credit facilities, retirement planning, money
markets, underwriting, and merger activities. These institutions are not allowed to
take deposits from the public.
Eg: Insurance companies, Gold deposits etc
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