Difference between banks &

NBFCs
 BANKS NBFCS
1 Definition Definition: banking is acceptance NBFCs are companies
of deposits withdrawal by carrying financial business
cheque or demand; NBFCs
cannot accept demand deposits

2 Scope of businessScope of business for banks isThere is no bar on NBFCs

limited by sec 6 (1) of the Bankingcarrying activities other than
Regulations Act financial activities

3 Licensing Licensing requirements are quiteIt is quite easy to form an

requirements stringent. NBFC. Acquisition of NBFCs is
Transfer of shareholding alsoprocedurally regulated but
controlled by RBI not approval required

4 Major No non-banking activities can be Cannot provide checking

limitations on carried facilities
business
5 Major privileges Can exercise powers of Do not have powers
recovery under SARFAESI under
and DRT law SRFAESI or DRT law

6 Foreign investment Upto 74% allowed to Upto 100% allowed

private sector banks

7 Regulations BR Act and RBI Act lay Controls over NBFCs are
down stringent controls relatively much lesser
over banks

8 SLR/CRR Banks are covered by SLR/ NBFCs have to maintain

Requirements CRR a certain ratio of
Requirements deposits in specified
securities; no such
requirement for non-
depository companies

9 Priority sector lending Certain minimum Priority sector norms

requirements exposure to priority sector are not applicable to
required banks