State the difference between NBFC and Bank.

The major differences between NBFC and Bank are as follows −

NBFC

• Provides banking services without holding banking license.

• Incorporated under companies Act 1956.

• Demand deposits are not accepted.

• 100% foreign investments are accepted.

• Maintenance of reserve ratio are not compulsory.

• No deposit insurance facility is available.

• They don’t create credit creation.

• No transaction services are provided.

Bank

• It is an authorised financial intermediary to provide banking services.

• Incorporated under banking regulation Act 1949.

• Demand deposits are accepted.

• Allows up to 74% for foreign investments in private sector.

• Maintenance of reserve ratio is compulsory.

• Deposit insurance facility is available.

• Banks create credit creation.

• Transaction services are provided.