NBFC is a company registered under the Companies Act, 2013 engaged in the business of loans and advances, acquisition of shares/stocks/bonds/debentures/securities issued by Government or local authority or other marketable securities of a like nature, leasing, hire-purchase, insurance business, chit business but does not include any institution whose principal business is that of agriculture activity, industrial activity, purchase or sale of any goods (other than securities) or providing any services and sale/purchase/construction of immovable property. A non-banking institution which is a company and has principal business of receiving deposits under any scheme or arrangement in one lump sum or in instalments by way of contributions or in any other manner, is also a non-banking financial company (Residuary non-banking company)
NBFC’s are those which don’t posses banking license, like the commercial or co-operative banks, but offer a variety of supportive and helpful services to public depositors, borrowers and investors in some selected areas of business. NBFC’s act as bridge between the banking and financial sector of the country. The usual and the most favoured business areas of these NFC’s are leasing and finance, commercial and industrial loans, hire purchasing , investment funds, instruments of the capital and money market, chit business and other similar activities.