Difference between NBFC & banks

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NBFC lends and makes investments and thus their activities square measure almost like that of banks; but there square measure a couple of variations that are given below:

 

·         NBFC will not settle for demand deposits whereas banks can.

·         NBFCs do not kind any a {part of} the payment and settlement system and do not have the ability to issue cheques drawn thereon whereas the banks square measure part of each the systems.

·         Deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation isn't offered to the depositors of any NBFC, not like just in case of a bank.[5]

·         NBFC do not seem to be allowed to issue Demand Drafts like banks.

·         NBFC cannot indulge primarily in agricultural or industrial activity.

·         NBFC cannot be concerned within the construction of associate degree stabile property

·         While banks square measure incorporated beneath Banking corporations Act, the NBFCs square measure incorporated beneath the corporate Act, 1956.[6]