NON – BANKING FINANCIAL COMPANY: UPSC Daily Important Topic | 8 May 2023

NON – BANKING FINANCIAL COMPANY.

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

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

✓ Another category of financial institution—the non-bank—is almost similar in its functions but 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 financialintermediation 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 a financial sector.