NBFC VS. BANK – A CRITICAL STUDY

1. HOME  KNOWLEDGE CENTRE   NBFC VS. BANK – A CRITICAL  STUDY NBFC VS. BANK – A CRITICAL STUDY Mani Dahiya | Fintech Compliance Professional | Updated Feb 01, 2020 In today’s scenario, loans have become more approachable to borrowers once they satisfy the necessary eligibility criteria. The foremost concern comes forth when we have to choose between banks and NBFCs. In the Financial Stability Report, the RBI con?rmed that NBFCs are better than banks, mounting customer satisfaction by fifteen percent. There are many differences and advantages of NBFCs over banks. Some of them are mentioned below: The banks fall under RBI-Banking Act, 1956 whereas NBFCs are registered under the Companies Act, 1956.  Unlike banks, NBFCs cannot accept demand deposits.  The maintenance of reserve ratio is obligatory only for the banks.  Some of the pros of NBFCs over banks consist of the below mentioned: Some of the pros of NBFCs over banks consist of the below mentioned: Fast loan authorizing process.  Ductile terms and conditions.  The attractive features and benefits for both new and existing borrowers.  It offers a wide range of customized loans and other financial products.  It also offers better customer services.  It brings cheaper loans at relatively lower rates.  Differences in Home Loan Interest Rate The banks function very strictly and directly under the prescribed regulations of the RBI, whilst NBFCs were created under the Companies’ Act, 1956. This fundamental di?erence has a direct inference in terms of the interest o?ering for loans that banks and NBFCs approval. This permits the banks to generally apply ?oating interest on your home loan, the rates for which are directly connected to MCLR. The rates, in this case, enhance or diminish based on the policy changes of RBI that are determined by economic factors. So, one must check out all the factors that may impact the home loan interest rate before time. Conversely, NBFCs ?x the interest rates on home loans as per PLR, which is not connected to the RBI. Here one can bargain with the lender to get a high amount approved at an insigni?cant rate of interest as the lender has the power to decide the interest with considerable versatility. This, however, depends on a good credit score and also after the eligibility criteria have been satisfied. Differences in flexibility of terms The Non-Banking Financial Companies sometimes have an upper hand over the banks in terms of the ease they o?er on the loan terms. Unlike banks, the paperwork involves while taking a loan from NBFC is less. The application submission procedure is also quite ?exible. Apart from the application ?exibility, one can gain the approval of up to Rs. ten crores for a tenor of twenty-?ve years within seventy-two hours of your application with well-known NBFCs. Differences in Eligibility Criteria The repayment capacity, credit score, income, the residence and workplace, and the assessment of the home one intends to buy are the parameters on which the home loan approval rests. These are the deciding factors for both banks and non-banking ?nancial companies. However, each financial institution has its own home loan eligibility criterion. This website uses cookies. By using this website you consent to our use of these cookies. For more information visit our Privacy  Policy. Got It!

2. Differences in processing time Both the banks and the non-banking ?nancial companies are very meticulous with their loan dispensation steps, which also includes rigorous veri?cations. Although, along with online application facilities where one can even upload the scanned copy of all the necessary documents, the dispensation time for Non-banking ?nancial companies are generally lower than banks. Usually, one can get an approval within seventy-two hours of your application in case of an NBFC. Differences in customer services The complete ?nancial sector is a service-led industry. Both banks and non banking ?nancial companies function day and night to meet the loan requests. However, when it comes to dedicated customer service NBFCs can sometimes outrun banks. With every home loan approval, they allow you to keep a tab of all your loan details, payments, and charges using your online account. Plus a customer relationship manager is appointed who attends to all the queries related to the loan to help the administration of the loan comfortably during the tenor. How to apply for Non-Banking Financial Companie in India Connect With Corpseed Connect with the team corpseed to discuss speci?c requirements for your business at IVR: +91 7558 640 644 hello@corpseed.com hello@corpseed.com. It takes 20-25 minutes to discuss requirement. IVR: +91 7558 640 644 or

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5. Mani Dahiya Fintech Compliance Professional | Company Act, RBI Act , Legal An enthusiast, adaptable, ambitious, compassionate, courageous, amiable, intuitive and extremely focused person. She is a BA.LLB (H) graduate from Amity Law School, Delhi. She is very active and rarely bored. She is an all-time foodie. She loves h... HAVE LEGAL QUESTIONS? Get help from an experienced legal adviser. Schedule your consultation at a time that works for you and it’s absolutely FREE. Name Email R E Q U E S T C A L L B A C K What do you think? 0 0 0 0 0

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