What is NBFC



6 mins read

Published: 25 November 2022

Updated: 19 September 2023

NBFC stands for the Non-bank financial companies that provide all the banking services to customers but they do not have a banking license. All NBFCs are managed by the Reserve Bank of India within the framework of the RBI Act, of 1934. They offer services like loans, credit facilities, retirement planning, currency exchange, underwriting, money markets, and merger activities.

Types of NBFCs

Broadly, there are three types of NBFCs, details of which are mentioned below briefly.

     ● NBFCs that are accepting public deposits,

     ● NBFCs that are not allowing public deposits but are engaged in financial businesses,

   ● The third, or the last type of NBFC, is engaged as core investment companies with a maximum percentage of their total assets invested in the securities of their group/ holding/subsidiary companies.

A business loan from NBFCs

There are many RBI-registered NBFCs that provide business loans to companies who are seeking to take loans. The significant advantage of taking loans from NBFC is that they provide quick loans. But it is to be noted that their interest rate is higher than that of the other private and government banks. You can take a loan of amounts between 15 lakh to 75 lakh.

Major  NBFCs that provide business loans are mentioned below.

     ● Chola Mandlam

     ● Bajaj Finserv

     ● Neogrowth

     ● Finplex

     ● Aditya Birla

Personal Loans

There are many NBFCs that provide personal loans for the one who is in financial aid. It is to be noted that NBFCs are registered under RBI and follow strict guidelines. Hence, one should be fully aware of the authenticity and give information to the listed NBFC. Mentioned below are the top NBFCs that provide personal loans. A person can take loan amounts between 50,000 to 50,00,000.

     ● Tata Capital

     ● Aditya Birla Capital

     ● Incred

Home loans

Non-banking financial companies also help you to buy and build your dream home. NBFCs can provide loan amounts of up to 5 crores. Build your home loan while taking financial aid from NBFCs.Below are some of the NBFCs you can consider for a home loan.

     ● Reliance Capital

     ● Sundaram Home Finance Limited

     ● L&T Finance

     ● Mahindra and Mahindra Financial Services Limited

     ● LIC Housing finance limited

 Factors to consider when taking a loan from NBFC.

Age: The optimal age for applying loan is 25-55 years.

Monthly Income: You must have a stable monthly income as your loan repayment depends on it.  

Credit history: A good credit score is a requirement for a loan, an ideal score is above 700. Maintain a good credit history to get loan approval swiftly.

Tenure: Longer the tenure of the loan, the higher the tenure more the amount paid to the bank as interest. The lesser the tenure, the less is the less money that you will pay as an interest to the bank. Plan your tenure accordingly.

Work Experience: Loan borrowers that have more work experience are more likely to be more financially secure and it is considered to be a factor while applying for the loan.

Documents required

     ● Proof of Residence

     ● Identity Proof

     ● Latest Bank Statement

     ● Salary Slip

     ● GST Return (Business loan)

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