When it comes to handling money—saving, borrowing, or investing—people often go to banks. But in recent years, NBFCs (Non-Banking Financial Companies) have become a popular choice too. Now the big question is: Should you choose a bank or an NBFC for your financial needs?
Let’s break it down into simple words to help you make the right choice.
What is a Bank?
A bank is a government-regulated financial institution where you can open a savings account, get a loan, deposit money, and more. Banks are tightly controlled by the Reserve Bank of India (RBI) and follow strict rules to keep your money safe.
What is an NBFC?
A Non-Banking Financial Company (NBFC) is a financial institution that offers services similar to a bank but without having a full banking license. NBFCs offer loans, credit facilities, asset management, investment services, and more.
NBFCs can’t accept traditional demand deposits like banks, but they are known for offering flexible and fast services.
Key Differences Between NBFCs and Banks
Features | Banks | NBFCs |
Regulator | RBI | RBI (with fewer restrictions) |
Deposit Acceptance | Can accept demand deposits | Cannot accept demand deposits |
Loan Processing | Slower, more formal | Faster, more flexible |
Interest Rates | Usually lower | Usually higher |
Services Offered | Wide range | Focused on loans and investments |
Risk Involved | Very low | Slightly higher |
Why Choose an NBFC?
NBFCs are becoming more popular because:
They approve loans faster.
Paperwork is less complicated.
They serve small businesses and people who might not get a loan from a bank.
They offer unique financial services like P2P lending, Account Aggregation, and Prepaid Payment Instruments (PPIs).
Types of NBFC Services
Let’s look at some services offered by NBFCs and how you can register or get involved in this business.
1. Register NBFC License
If you want to start an NBFC in India, the first step is to register an NBFC license with the RBI. You need to have a minimum capital of ₹2 crores, a proper business plan, and a clean financial record. Once registered, you can offer financial services like loans, leasing, and asset financing.
2. Register NBFC Account Aggregator License in India
An Account Aggregator (AA) is a special type of NBFC that helps people share their financial information securely with lenders or other service providers. If you want to offer this service, you must register an NBFC account aggregator license in India from the RBI.
This helps improve financial inclusion and gives users better control over their data.
3. NBFC Takeover Procedure
If you don’t want to start from scratch, you can take over an existing NBFC. The NBFC takeover procedure involves getting RBI approval, signing share transfer agreements, and ensuring compliance with all laws. This is a great option if you want to enter the NBFC business quickly.
4. Obtain PPI License
Prepaid Payment Instruments (PPIs) like wallets or prepaid cards are useful for online and offline transactions. To offer these, NBFCs need to obtain a PPI license from RBI. These licenses allow companies to provide payment solutions, which are in high demand today.
5. Obtain P2P License
Peer-to-Peer (P2P) lending platforms allow individuals to lend and borrow money directly from each other. To start such a platform, NBFCs must obtain a P2P license from RBI. These platforms are growing fast because they offer better interest rates and easy access to credit.
Why Choose a Bank?
Banks are perfect if you want:
Safe deposits.
Long-term savings like fixed deposits.
Salary accounts or current accounts.
Government-backed financial services.
Banks are more secure and are a better choice if you are risk-averse.
NBFC or Bank: Which One is Better?
The answer depends on your needs.
If You Want… | Choose… |
Fast loan approval | NBFC |
Less paperwork | NBFC |
High safety for savings | Bank |
Digital wallets and PPI services | NBFC |
Peer-to-peer lending options | NBFC |
Full banking services (ATM, Cheques) | Bank |
Starting a financial business | NBFC |
Final Thoughts
NBFCs and banks both play important roles in India’s financial system. Banks are ideal for safe, traditional banking needs. NBFCs are great for faster, more flexible financial solutions.
If you're a business-minded person, registering an NBFC can be a good opportunity. Whether you want to register an NBFC license, obtain a P2P or PPI license, or even register an NBFC account aggregator license in India, the market is open and growing.
Also, if you want a quicker way to enter this space, you can explore the NBFC takeover procedure and start offering financial services under an existing NBFC structure.
Choose wisely based on your financial goals and comfort with risk. Whether it's a bank or an NBFC, both are here to serve your needs in different ways.
