NON-BANKING FINANCIAL COMPANY: UPSC Daily Important Topic | 14 February 2022

NON – BANKING FINANCIAL COMPANY.

✓Bank is a financial institution engaged primarily in mobilizing deposits and forwarding loans.

✓ Banks are regulated by the Central bank of the country—in the case of India, the RBI (Reserve Bank.

✓ Another category of financial institution—the non-bank—is almost similar in its functions but the main difference (though, highly simplified) being that it does not allow its depositors to withdraw money from their accounts.     

✓NBFCs (Non-Banking Financial is an heterogeneous group of institutions (other than commercial and co-operative banks) performing financial intermediation in a variety of ways, like accepting deposits, making loans and advances, leasing, hire purchase, etc.

✓They raise funds from the public, directly or indirectly, and lend them to ultimate spenders.

✓ They advance loans to the various wholesale and retail traders, small-scale industries, and self-employed persons. Thus, they have broadened and diversified the range of products and services offered by the financial sector.