Non-Banking Financial Institutions

NBFC’s are financial intermediaries engaged primarily in the business of accepting deposits and making loans and advances, Investments, leasing, hire-Purchase etc. NBCs are a heterogenouslot. NBFC sector is characterized by a large number of privately owned, decentralized and relatively small sized financial intermediaries. NBFCs are of various types such as loan companies (LCs), investment companies (ICs), here purchase finance companies (HPFCS), equipment leasing companies (ELCs) mutual benefit financial companies (MBFCs) also known as NIdhis, and equipment leasing companies are defined on the basis of the principal activity of their business. Although NBFCs in India have existed for a long time, they shot into prominevce in the second half of the 80’s & in the Ist half of the 70’s as deposits raised by them grew rapidly. Customer orientation, concentration in the main financial centres & attractive rates of return offered by them are some of the reason for their rapid growth. Primarily engaged in the area of retail banking, they face competition from banks & financial institutions.

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