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A Non-Banking Financial Company (NBFC) can provide credit and make investments in the same way as banks can, but there are a few distinctions in the founding, structure, and operation of an NBFC registration from that of a bank. The following are some of the differences:
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NBFCS V/S BANKS DEMAND DEPOSITS ARE NOT ACCEPTED BY NBFCS. 1 BECAUSE OF THE FEWER LICENCING REQUIREMENTS, ESTABLISHING AN NBFC REGISTRATION IS QUITE SIMPLE. 2 3 A NON-BANK FINANCIAL INSTITUTION (NBFC) IS NOT A PART OF THE PAYMENT OR SETTLEMENT SYSTEMS. AN NBFC IS UNABLE TO WRITE CHECKS DRAWN ON ITSELF. 4 IN CONTRAST TO PRIVATE BANKS, AN NBFC CAN ALLOW 100% FOREIGN INVESTMENT. 5 AN NBFC, UNLIKE A BANK, CANNOT PROVIDE TRANSACTION SERVICES. 6 AN NBFC IS NOT REQUIRED TO MAINTAIN A RESERVE RATIO, WHICH IS REQUIRED BY BANKS. 7 8 NBFC DEPOSITORS ARE NOT COVERED BY THE DEPOSIT INSURANCE AND CREDIT GUARANTEE CORPORATION'S DEPOSIT INSURANCE PROGRAMME. www.enterslice.com