Non-Banking Financial Company or NBFC is an incorporated company that is a financial institution having primary business as loans and advances, acquisition of shares, stocks, bonds, and other marketable instruments, insurance business, or chit business, etc. These companies are known for introducing a wide range of products, hassle-free finances, and ease of access to the unbanked sector. Their decisions are quicker, involves much less paperwork, prompt disbursal of loans, broader reach, and the eligibility requirements are not as rigid as the organized banks. Due to all these reasons and personalized products, more customers prefer transacting with NBFC than banks.
All NBFCs are regular companies, registered under the Companies Act of 1956 or 2013. They must not be involved in any agricultural or industrial activities, or sale, purchase or construction of immovable property, etc.
In India, NBFCs have made finance accessible to rural and semi-urban parts of the country. Providing easier working loans and credit facilities, especially where most banks either do not finance due to their stringent rules or have absolutely no reach.