Difference between banks & NBFCs

NBFCs lend and make invest­ments and hence their activ­i­ties are akin to that of banks; how­ev­er there are a few dif­fer­ences as giv­en below:

i. NBFC can­not accept demand deposits;

ii. NBFCs do not form part of the pay­ment and set­tle­ment sys­tem and can­not issue cheques drawn on itself;

iii. deposit insur­ance facil­i­ty of Deposit Insur­ance and Cred­it Guar­an­tee Cor­po­ra­tion is not avail­able to depos­i­tors of NBFCs, unlike in case of banks.

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