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Commercial Banks & Non-Banking Financial Companies (NBFCS)

Commercial banks in India, such as the State Bank of India, provide services like accepting deposits, offering loans, facilitating payments, and wealth management. Non-Banking Financial Companies (NBFCs) like Bajaj Finance offer similar services but lack a banking license, focusing on specialized financial products and reaching underserved markets. Both institutions play crucial roles in financial inclusion and economic growth.

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Pankaj Sardana
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23 views7 pages

Commercial Banks & Non-Banking Financial Companies (NBFCS)

Commercial banks in India, such as the State Bank of India, provide services like accepting deposits, offering loans, facilitating payments, and wealth management. Non-Banking Financial Companies (NBFCs) like Bajaj Finance offer similar services but lack a banking license, focusing on specialized financial products and reaching underserved markets. Both institutions play crucial roles in financial inclusion and economic growth.

Uploaded by

Pankaj Sardana
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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Commercial Banks

Commercial Bank
• A commercial bank in India is a financial institution that provides a
range of services to the public. For example, the State Bank of India
(SBI) is a major commercial bank. It accepts deposits from individuals
and businesses, such as your savings in a savings account or fixed
deposit. SBI also provides loans for personal needs like buying a car or
home, and for businesses to expand or operate. It facilitates everyday
transactions, allowing people to use checks, debit cards, and online
transfers. Essentially, commercial banks like SBI help people manage
their money and access credit.
Primary Functions of a
Commercial Bank
1. Accepting Deposits: People can open savings accounts, current
accounts, or fixed deposits to safely store their money and earn
interest. Example: If you open a savings account with ICICI Bank, you
deposit your money and earn interest on it.

2. Providing Loans: Banks offer various types of loans, such as personal


loans, home loans, and auto loans. Example: If you want to buy a
new car, you might take out an auto loan from HDFC Bank.
Primary Functions of a
Commercial Bank
3. Facilitating Payments: Banks help you pay bills, transfer money, and
use debit/credit cards. Example: You can use your debit card from Axis
Bank to pay for groceries or use online banking to transfer money to a
friend.

4. Wealth Management: Banks provide investment services and


financial advice. Example: If you want to invest in mutual funds, you
might consult with a financial advisor at SBI.
Non-Banking Financial
Companies (NBFCs)
Non-Banking Financial
Companies (NBFCs)
• Non-Banking Financial Companies (NBFCs) are financial institutions
that offer services similar to banks but do not have a banking license.
For instance, companies like Bajaj Finance and Shriram Transport
Finance are NBFCs. They provide loans and credit, such as personal
loans or vehicle financing, but do not offer checking accounts or
accept demand deposits. NBFCs are important for offering specialized
financial products and reaching areas or customer segments not fully
served by traditional banks.
Significance of Non-Banking Financial
Companies (NBFCs) in Financial Sector
1. Financial Inclusion: They reach underserved segments of the
market. Example: Shriram Transport Finance provides loans to truck
drivers and small transport operators who might not get loans from
traditional banks.
2. Alternative Financing: They offer financing options beyond what
banks provide. Example: Bajaj Finance offers easy EMI schemes for
purchasing consumer electronics.
3. Support for Economic Growth: By funding various sectors, they
contribute to economic development. Example: NBFCs might fund
infrastructure projects or small businesses, aiding in regional
development.

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