Banks are one of the major financial institutions which can help their country and the public by applying their methods. Banks facilitates their customers, such as accepting deposits, providing loans, paying cheques and performing for their customers. Majority of bank officers are from varied backgrounds and streams. Bank jobs are actually one of the most popular career choices among aspiring students as it generates their smooth entry into a well paid and secure career.
According to the Bank Holding Company Act, 1956, a bank is such a financial depository institution which accepts deposit for their customer and provides various facility i.e. accept cheque, banking loan, and more. Bank provides appropriate credits and funds to their customers. Banks have three types of accounts, where their customers deposit their amount.

The three types of accounts is Current account, Savings account, and Fixed deposit accounts. Current account is mostly demanded by the businessman and an Entrepreneur. On the other hand, a Saving account is opened by middle class or salary base individuals and at the end, Fixed deposit account is opened for the purpose of savings by their customers. Banks work only for public and it acts as a mediator among suppliers and users of funds. It collects funds of their customers from three sources, first one is Chequing accounts, second is Savings and third is Time Deposits.
Banks earn by reinvesting these funds in longer term assets. Bank provides loans to their customers on behalf of any security and charge a pre-defined interest rate during a specific period of time. A bank also provides all essential facilities to their customers. On the other hand, Bank also plays a major role in economic evolution and social changes. However, many people think that, bank has a narrow role in an economy, therefore, we can define various roles of banks:
- Banks perform an intermediary role in the economy. Banks transform the amount of households saving into a credit for making an investment, for business firm and for equipment’s or other goods.
- Bank plays another role, which is called a payment role. They collect a payment for goods and services on behalf of their customer.
- Bank play a guarantor role in an economy. It stands behind their customer, as a guarantor for his unpaid debt.
- Banks provide one of the best opportunities to their customer for his Savings. By this opportunity customers can build, manage and can protect their savings. Bank have also provided various facilities on the amount of their savings such as, provided credit card, debit card, loans and others.
- Banks can also manage the risk management of their customers, which is mostly related to loss of property and individuals.
- Banks can manage or protect their customer assets and redeemed or issued their customer securities.
Well, after discussing about the meaning and role of bank in their personal and economical life, Let’s explain about the Non Banking Financial Companies of India:
Non banking financial companies are one of major parts in our financial system. Non Banking Financial companies are most likely treated as banks. It facilitates all banking services to their customer.
However, we can’t treat them as banks because it does not hold a banking licence and it does not allow accepting public deposits, though all operations of NBFC are still covered under the banking regulations. NBFCs offer various number of banking services such as credit facilities, money markets, retirement planning, underwriting, loans, and merger activities.
These companies have expanded in last several years as venture capital companies.
Now, let’s have a look at the difference between the Banks and NBFCs:
- Banks are those financial institutions who accept public deposit and provide services such as loans, bank accounts, mutual funds, share trading account, etc. On the other hand, NBFCs are those financial institutions who do not accept public deposit but it can provide all banking services except bank accounts.
- Banks interacts directly with customers but NBFCs interacts with banks and government.
- Banks could be concerned in national and international customer but NBFCs could be concerned with only finances of foreign companies.
- NBFCs main interest is to help in stabilization of the currency but, on the other hand, Banks main interest is to help in savings, investment and business transactions.
- NBFCs do not hold a banking licence, it works under the banking regulations but the banks have a banking licence, which comes under the Bank Holding Company Act, 1956.
Also check out: List of top 10 Banks in India.
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