Banks are important financial institutions which offer many services to customers like accepting deposits, clearing cheques, and providing bank loans.
Whereas, an NBFC is a Non-Banking Financial Company which gives similar services to customers except issuing self-drawn cheques and demand drafts.
Let us have a look at the differences between a Bank and an NBFC:
- Banks are an integral part of the payment and transaction system i.e. banks provide the options of saving and investments but an NBFC does not.
- Banks provide services like transactions, providing overdraft facility, the issue of traveler’s cheque, and transfer of funds to customers whereas an NBFC does not.
- Banks mostly offer loans with security (the person has to give some asset as security, which after late or no repayment can be taken by the bank) and the loan disbursal takes time. But an NBFC gives unsecured loans and the disbursal rate is quite quick.
- Banks have to maintain reserve ratios like CRR or SLR, which is not the case for an NBFC.
- Banks provide services like transactions, providing overdraft facility, the issue of traveler’s cheque, and transfer of funds to customers whereas an NBFC does not.
- Bank fixed deposits are insured, but an NBFC fixed deposit is not insured that is because investing in an FD with an NBFC is similar to company fixed deposits. Hence, if an NBFC stops you from withdrawing the principle amount then it a very long process.
Both of them have their own set of benefits, so when going for taking a loan, it is advisable to choose according to the requirements.
If you want to go for an unsecured business loan, you can contact Gromor Finance which gives loan at attractive interest rates within 3 days or less!