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I read in the book Indian Economy by Ramesh Singh that,

NBFCs are fast emerging as an important segment of Indian financial system. It is an heterogeneous group of institutions performing financial intermediation in a variety of ways, like accepting deposits, making loans and advances, leasing and hire purchase etc.

I am extremely unfamiliar with the financial terms. What does this mean?

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  • Which terms specifically?
    – glibdud
    Commented May 2, 2021 at 5:50
  • @glibdud "variety of ways, like accepting deposits, making loans and advances,leasing and hire purchase" Commented May 2, 2021 at 6:08
  • Reserve Bank of India: FAQ: All you wanted to know about NBFCs
    – Flux
    Commented May 2, 2021 at 6:14

2 Answers 2

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In many countries there are companies that verge on the edge of being a bank, even though many people don't realize it.

  • Casinos. They move massive amounts of money.
  • Automobile companies. Their financing arm handles many loans
  • The company that finances all those new smart phones that people pay for over 30 months.
  • Companies that finance the purchases of large industrial equipment.
  • Peer-to-peer lending companies

The list and regulations depends on the country.

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  • What are Peer to Peer lending companies? Commented May 2, 2021 at 12:19
  • these are companies that facilitate small loans between people. Commented May 2, 2021 at 12:20
  • Why would somebody want to lend someone when his business involves so much risk? Commented May 2, 2021 at 12:23
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    @RajorshiKoyal That's why there is a higher interest rate on higher risk loans.
    – Flux
    Commented May 2, 2021 at 22:22
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In simple words,

Non-Banking Financial Companies also know as NBFCs are establishments that provide financial services and banking facilities without meeting the legal definition of a bank. They are covered under the Banking regulations laid down by the Reserve Bank of India and provide banking services like loans, credit facilities, TFCs, retirement planning, investing, and stocking in the money market. However, they are restricted from taking any form of deposits from the general public.

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