How is NBFC different from commercial bank?

Answer 1

Banks are incorporated under banking companies act but while as NBFC are incorporated under company act of 1956....Banks can issue cheques on its name but while as NBFC cannot do so.....Banks can accept deposit from general public contrary Nbfc cannot do the same.

Answer 2

NBFCs lend and make investments and hence their activities are akin to that of banks; however there are a few differences as given below:

i. NBFC cannot accept demand deposits;

ii. NBFCs do not form part of the payment and settlement system and cannot issue cheques drawn on itself;

iii. deposit insurance facility of Deposit Insurance and Credit Guarantee Corporation is not available to depositors of NBFCs, unlike in case of banks.