History of NBFC
Non-Banking Financial Companies are rising fast as an integral part of the Indian economic system. A non-banking financial organization or non-bank financial company (NBFC) does not have a full banking license but facilitates bank-related financial services like investment, contractual savings, & market brokering, and risk pooling. They play an enormous role in strengthening the economy and are able to carve out a place for themselves in meeting the credit needs of both wholesale and retail customers.
Role of NBFI in the financial system
- NBFIs act as a supplement to banks by providing infrastructure to distribute excess resources to individuals & companies with deficits.
- Unlike banks who may offer a packaged deal on a collection of monetary services, NBFIs offer customized services to suit the precise needs of clients Non-Banking Financial Institutions specializing in one particular sector develop the informational advantage.
- From loans and credit facilities to non-public education funding and retirement planning, from trading in money markets to underwriting stocks & shares, and Term Finance Certificates, NBFCs offer most banking services.
- The number of NBFCs has increased greatly in the last several year’s thanks to risk capital companies, retail & industrial companies have entered the lending business. NBFCs also often support properties
investments in properties besides preparing feasibility, market, or industry studies for companies.
- NBFCs are usually not allowed to take deposits from the general public and have to find options for funding their operations.
- NBFCs do not provide cheque books nor do they provide a saving account and current account. They are only authorized to take fixed deposits or time deposits.