What is NBFC?
2022-08-17
18 min read
"Necessity is the mother of invention." This quote from Plato briefly describes the emergence of NBFC at the sea of banks.
Remember that you were in a long line just to deposit and withdraw money? How efficient is a bank that wasted applying for a loan all day long? These very problems have led to the creation of NBFC, an organization that performs almost all functions of banks more efficiently and effectively.
But how are these NBFCs different from banks? Are these safe? You may have many questions in your mind. The answers to these questions can be found on this blog. So get stuck!
What is NBFC? Before moving on to NBFC, let's take a look at situations that can help you understand the purpose of NBFC. Households are showing a good transition, with people storing emergency funds in banks rather than simply saving cash. For decades, people have deposited extra money in banks and some institutions to get them interested. These institutions then lend the money to others at higher interest rates. That's what NBFC does! NBFC is an abbreviation for non-bank financial company. As the name implies, these institutions are financial companies, not banks. These companies do not have a bank license, but they perform almost all the functions of a bank.
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