Functions of Non Banking Financial Company (NBFC)

Non Banking Financial Company also known as NBFC company, functioning as per the Indian Companies Act, giving loans and advances to the public. An NBFC company can acquire shares, stocks, bonds, debentures and securities from Government as well as local authority or any other marketable securities.

Marketing securities are considered to be leasing, hire purchase, insurance brokerage, chit fund etc. An NBFC Company mainly accepts deposits in various schemes -it may be a lump-sum amount or multiple installments in order to roll their business active.

Though NBFC company lend and make investments with public just like what a commercial banks do, there are some apparent restrictions to them issued by RBI mainly as given below:

  1. NBFC company should keep away from accepting demand deposits from any sources.
  2. NBFC company can't issue cheques drawn on itself.
  3. NBFC Company can't form part of the payment and settlement system.
  4. Depositors of a NBFC company cannot have facilities like deposit insurance scheme.