What is the Full Form of NBFC? Its Meaning, Types, Role & Scope

As the world's second-largest internet-using country, India's digital transformation in the financial sector is gaining momentum. According to the website Statista, in December 2021, NBFCs accounted for 36% of India’s lending landscape. With the rising popularity of embedded finance and digital lending, NBFCs in India are set to transform the financial ecosystem in the forthcoming years. 

What is the full form of NBFC?

Full Form of NBFC in respect to financial sector is Non-banking Financial Companies. At present, India is brimming with new-age NBFCs that offer a plethora of financial services and products. As per Statista, nearly 9,860 NBFCs registered with the Reserve Bank of India in 2022. 

What are NBFCs? NBFC Meaning and NBFC Full Form in Banking

NBFCs provide banking and other financial services without holding a banking license and are registered under the Company's Act of 1956. These companies engage in loans and advances, credit facilities, savings and investment products, and the acquisition of stocks, bonds, and shares. NBFCs offer credit to many sectors of the Indian economy, covering a wide range of unbanked sections of society and budding businesses.

In today’s financial landscape, NBFCs are playing an integral role by providing loans at affordable rates. The NBFC sector has also introduced new credit disbursal procedures to micro, small and medium enterprises (MSMEs). This contributes largely to the Indian economy and the overall financial system.

Types of Non-banking Financial Companies (NBFC)

NBFCs can be classified into two broader categories based on their activity and the deposits they hold. Let’s look at them.

1. Asset Finance Company: An asset finance company provides funds for procuring assets to companies that are involved in manufacturing, or other economic activities. These assets include tractors, industrial machines, automobiles, and more.
2. Investment Company: These companies solely deal in investments by investing funds on behalf of their clients. The clients are expected to share the total profit or loss with the investment company
3. Infrastructure Finance Company: These companies provide loans for infrastructural development of projects such as energy, transport, communication, water & sanitation, and other social and commercial infrastructure.
4. Loan Company: These companies offer loans in the form of financial products such as Personal Loans, Business Loans, and Working Capital Loans.
5. Micro-Finance Company: These companies provide small-scale financial services in the form of credit or savings to the unbanked population in rural and semi-urban areas.

Also Read: Here's How To Get A 25 Lakh Personal Loan With NBFCs

What is the Role & Scope of Non-banking Financial Companies (NBFC)?

Digital lending has become one of the most promising financial services across India. High demand for comparatively smaller loans with easy, digital application processes by individuals and small and medium enterprises has widened the scope for NBFCs.

NBFCs have the business agility to serve various small and medium businesses faster as compared to traditional banks. Flexible payment plans, low-cost EMIs, and competitive interest rates are some of the top USPs of loan products offered by new-age NBFCs.

In addition to this, the rising adoption of artificial intelligence (AI) and blockchain-based financial services will further enhance the product portfolios of NBFCs in the future. The growing availability of internet and telecom services across villages, rural areas, and semi-urban areas is also creating a conducive environment for NBFCs.

Conclusion

Modern-day lending institutions are carving out their niche in the financial sector. With attractive financial products such as Personal Loans, Professional Loans, Business Loans, and Medical Equipment Loans, Poonawalla Fincorp is one of the leading NBFCs in India. Catering to your unique financial needs, we offer loans at competitive interest rates, minimal documentation, and quick disbursal through a seamless online application process.

Now that you know the full form of NBFC, its meaning, role, and features, you can always reach out to them to meet your financial goals.