NBFC – Non-Banking Financial Companies
The NBFC full form is Non-Banking Financial Companies, which is also referred to as non-banking financial institutions. These are financial institutions that provide various banking services, but they do not have eligibility to hold a Banking license. NBFCs are not subject to the banking traditional regulations and oversight by federal and state authorities obeyed by traditional banks.
Features of NBFC:
NBFCs advocate stated that these institutions play a vital role in the process of rising demand for credit, loans, and other related financial services. Moreover, NBFC’s full form is Non-Banking Financial Companies helps in numerous ways to customers, that includes both commercial and individuals. Especially those who have trouble qualifying, in the most rigorous standard set of traditional banks.
Even though the authorities are troubled by NBFCs’ lack of accountability to regulators and their ability to organize and manage outside the customer banking rules and conditions. In many cases, they face aberration by other authorities like the Securities and Exchange Commission (SEC). Although, they came over this oversight and may be able to operate with a lack of clarity.
Merits of NBFC:
- The high percentage of profit for investors.
- NBFC acts as an alternative source of funding and credit.
- It provides direct contact with clients and eliminates intermediaries like brokers.
- Financial resource for Customers in any kind of financial system.
Demerits of NBFC:
- Non-regulated, not authorized subject to mistakes.
- The financial process is a Non-transparent operation.
- Structured risk to the financial system and economy.
Final Words:
To conclude, NBFC full form is Non-Banking Financial Companies, not only offers alternative sources of loans and credits, but exponent proposed, they also provide more efficient sources and services. Authority figures out that they have increased in strength since then, and therefore represent a greater liability than ever before. However, the fastest-growing branches of the non-bank lending sector have been peer-to-peer lending.