Bank vs NBFC differences

Question

Accepted Answer

Banks are regulated by RBI, while NBFCs are regulated by Companies Act. Banks can accept demand deposits, while NBFCs cannot.

Banks are financial institutions that are regulated by the Reserve Bank of India (RBI), while Non-Banking Financial Companies (NBFCs) are regulated by the Companies Act.
Banks can accept demand deposits, while NBFCs cannot.
Banks can issue cheques and demand drafts, while NBFCs cannot.
Banks can offer a wider range of services, such as credit cards, debit cards, and internet banking, while NBFCs are limited in their offerings.
Banks are required to maintain a certain level of cash reserve ratio (CRR) and statutory liquidity ratio (SLR), while NBFCs are not.
Banks are allowed to lend to all sectors of the economy, while NBFCs are restricted in their lending activities.
Banks are considered to be safer than NBFCs, as they are subject to more stringent regulations and oversight.

Accepted Answer

Banks and Non-Banking Financial Companies (NBFCs) are both financial institutions that offer similar services, but have several key differences: 
Regulation: Banks are regulated by the Reserve Bank of India (RBI) under the Banking Regulation Act, 1949, while NBFCs are regulated by the RBI under the RBI Act, 1934, and the Companies Act, 2013. Banks are subject to a stricter regulatory framework than NBFCs. 
Deposit insurance: Banks offer deposit insurance through the Deposit Insurance and Credit Guarantee Corporation (DICGC), while NBFCs do not. 
Demand deposits: Banks accept demand deposits from the public, while NBFCs cannot. 
Payment and settlement system: Banks are part of the payment and settlement system, while NBFCs are not. 
Reserve ratio: Banks must maintain a reserve ratio, while NBFCs do not. 
Foreign investment: Banks can receive up to 74% foreign financial asset grants, while NBFCs can receive 100% foreign investment. 
Lending standards: NBFCs may have more lenient lending standards than banks. 
Capital adequacy ratio: Banks must maintain a higher capital adequacy ratio than NBFCs.

Bank vs NBFC differences

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