Non-Banking Financial Institution (NBFI)
non-banking fina1ncial institution (NBFI) or non-bank financial
company (NBFC) is a financial institution that does not have a full banking
license or is not supervised by the central bank.
The NBFIs do not carry on pure banking business, but they will
carry on other financial transactions. They receive deposits and give loans.
They mobilize people’s savings and use the funds to finance expenditure on
investment activities. In short, they are institutions which undertake
borrowing and lending. They operate in both the money and the capital markets.
NBFIs can be broadly classified into two categories. Viz.., (1)
Stock Exchange; and (2) Other Financial institutions. Under the latter category
comes Finance Companies, Finance Corporations, ChitFunds, Building Societies,
Issue Houses, Investment Trusts and Unit Trusts and Insurance Companies.