NBFC vs Small Finance Bank: What’s the Difference?
Descriptive Prep Today
If you are preparing for banking exams, knowing this difference is important! Let's understand it in simple words.
What is NBFC?
🔵 A Non‑Banking Financial Company provides loans, hire purchase, insurance, etc.
🔵 Registered under Companies Act, 2013.
🔵 Cannot accept savings/current deposits.
🔵 Examples: Bajaj Finance, Shriram Finance.
What is Small Finance Bank?
🟢 A bank that serves small businesses, farmers, and low‑income groups.
🟢 Can accept deposits (savings, current, FD).
🟢 Regulated by RBI under Banking Regulation Act, 1949.
🟢 Examples: AU Small Finance Bank, Equitas SFB.
💡 Key Differences
NBFC = Financial company that gives loans but isn’t a bank
SFB = A proper bank focused on small borrowers & depositors
⭐ Both are important for our economy, but their functions and rules are different.