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Diff BW Banks and NBFC

Banks and NBFCs differ in key areas such as licensing requirements, scope of business, regulations, and priority sector lending norms. Banks have more stringent licensing and foreign investment caps compared to NBFCs. Additionally, banks face more regulatory controls and must maintain statutory liquidity and cash reserve ratios, which are not requirements for non-deposit taking NBFCs. Overall, NBFCs have more flexible operations than banks but less regulatory privileges like powers of recovery.

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Aŋoop Krīşħŋặ
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61 views3 pages

Diff BW Banks and NBFC

Banks and NBFCs differ in key areas such as licensing requirements, scope of business, regulations, and priority sector lending norms. Banks have more stringent licensing and foreign investment caps compared to NBFCs. Additionally, banks face more regulatory controls and must maintain statutory liquidity and cash reserve ratios, which are not requirements for non-deposit taking NBFCs. Overall, NBFCs have more flexible operations than banks but less regulatory privileges like powers of recovery.

Uploaded by

Aŋoop Krīşħŋặ
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Download as PPTX, PDF, TXT or read online on Scribd
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Difference between banks &

NBFCs
BANKS NBFCS
1 Definition Definition: banking is acceptance NBFCs are companies
of deposits withdrawal by carrying financial business
cheque or demand; NBFCs
cannot accept demand deposits

2 Scope of businessScope of business for banks isThere is no bar on NBFCs


limited by sec 6 (1) of the Bankingcarrying activities other than
Regulations Act financial activities

3 Licensing Licensing requirements are quiteIt is quite easy to form an


requirements stringent. NBFC. Acquisition of NBFCs is
Transfer of shareholding alsoprocedurally regulated but
controlled by RBI not approval required

4 Major No non-banking activities can be Cannot provide checking


limitations on carried facilities
business
5 Major privileges Can exercise powers of Do not have powers
recovery under SARFAESI under
and DRT law SRFAESI or DRT law

6 Foreign investment Upto 74% allowed to Upto 100% allowed


private sector banks

7 Regulations BR Act and RBI Act lay Controls over NBFCs are
down stringent controls relatively much lesser
over banks

8 SLR/CRR Banks are covered by SLR/ NBFCs have to maintain


Requirements CRR a certain ratio of
Requirements deposits in specified
securities; no such
requirement for non-
depository companies

9 Priority sector lending Certain minimum Priority sector norms


requirements exposure to priority sector are not applicable to
required banks

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