State the difference between NBFC and Bank.

The major differences between NBFC and Bank are as follows −


  • 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.


  • 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.

Updated on: 25-Jul-2020


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