What Are NBFCs and Why Are They Important?
NBFCs are also referred to as “unlicensed Banks” or “Banks without a Bank License”. Even though they come under the Reserve Bank of India, they provide credit but are not categorized as banks. They operate under the RBI Act of 1934.
Major Responsibilities of NBFCs
1. Provisioning of Credit
- Extended loans and advances to individual persons, MSMEs, and companies.
2. Medicated debt financing
- Advanced payment to purchase vehicles, build machinery, and buy other asset classes.
3. Wealth Management Services
- Investment analysis, portfolio management, and recommendation services were offered.
4. Financial Inclusion
- Providing credit and other financial services to the excluded and unbanked population.
5. Infrastructure Financing
- Providing assistance in large infrastructure and real estate projects.
