A Non-Banking Financial Company (NBFC) is a financial institution that offers various banking services, but does not have a banking license. NBFCs are not subject to the banking regulations and oversight by federal or national banks, though they are still regulated under financial and banking laws. In India, NBFCs are registered under the Companies Act, 2013, and regulated by the Reserve Bank of India (RBI). They play a crucial role in the financial system by complementing the banking sector, particularly in offering credit to the unbanked segments of society and to small and medium-sized enterprises.

NBFCs specialize in providing a variety of financial services that include loans and credit facilities, retirement planning, money markets, underwriting, and merger activities. Unlike banks, NBFCs cannot accept demand deposits (deposits that can be withdrawn by the depositor at any time without any prior notice) or issue checks drawn on themselves. One key feature that distinguishes NBFCs from commercial banks is that they are not a part of the payment and settlement system and as such cannot issue cheques to its customers.

The operations of NBFCs are critical in promoting inclusive growth in the country, by making financial services available to a broader segment of the population. This is particularly important in emerging markets like India, where many small businesses and individuals might not meet the stringent requirements to obtain financing from traditional banks. NBFCs often cater to the needs of rural areas and help in the financial inclusion of neglected sectors contributing significantly to the country's economic development.

Furthermore, NBFCs are subject to certain requirements such as maintaining a part of their deposits in liquid assets and complying with the RBI’s guidelines on fair practices in lending, thus ensuring transparency and fair treatment of consumers. These regulations help in maintaining the stability and integrity of the financial system while providing consumers with more options for financial services.

How ARTHiQ Helps with NBFC Support

ARTHiQ provides comprehensive assistance for Non-Banking Financial Companies (NBFCs), covering everything from initial registration, compliance, and documentation to setting up robust internal control systems. We also offer tailored training programs, business coaching, and expert guidance for smooth NBFC takeovers. With ARTHiQ by your side, you receive end-to-end support, ensuring your NBFC operates efficiently and remains compliant with all regulatory requirements.

Non-Banking Financial Company (NBFC)