Comparing NBFCs & Micro Lenders – What Is The Difference?

In the world of finance, Non-Banking Financial Companies (NBFCs) and micro-lenders are two important types of institutions that provide financial services to people. While both NBFCs and micro-lenders offer financial services, there are key differences between the two. In this blog post, we will explore these differences and discuss the role of NBFCs and micro-lenders in the financial industry.

 

NBFCs are financial institutions that provide a wide range of financial services, such as loans, insurance, and investment services. They operate like banks but are not regulated by the Reserve Bank of India (RBI). Instead, they are regulated by the Ministry of Corporate Affairs. NBFCs typically provide loans to individuals and businesses that may not qualify for traditional bank loans. Some examples of NBFCs in India include Bajaj Finance, HDFC Limited, and LIC Housing Finance Limited.

 

Micro-lenders, on the other hand, are organizations that provide small loans to people who are often considered to be underbanked or unbanked. These loans are typically for small amounts and are used for short-term needs, such as purchasing inventory for a small business or paying for medical expenses. Micro-lenders typically operate differently from traditional banks and NBFCs because they focus on providing loans to people who would not otherwise have access to financial resources. Examples of micro-lenders in India include Ujjivan Small Finance Bank and Satin Creditcare Network Limited.

 

One of the key differences between NBFCs and micro-lenders is the size of the loans they offer. NBFCs typically offer larger loans, such as home loans and car loans, while micro-lenders offer smaller loans. Another difference is the target market. NBFCs tend to focus on higher-income individuals and businesses, while micro-lenders target low-income individuals and small businesses.

While NBFCs and micro-lenders have different target markets, they both play an important role in the financial industry. NBFCs provide access to financial resources to people who may not qualify for traditional bank loans, while micro-lenders provide access to financial resources to people who would not otherwise have access to financial services.

 

In conclusion, NBFCs and micro-lenders are two important types of financial institutions that provide financial services to people. While there are differences between the two, they both play an important role in providing access to financial resources to people. Whether you are looking for a large loan or a small loan, there is likely an NBFC or micro-lender that can help you meet your financial needs.

With so many NBFCs floating around, we here at LiteFin are ready to help you navigate. As a finance aggregation platform, we are useful for individuals who want to stay on top of their finances and make more informed financial decisions. They can also be valuable for businesses that need to monitor their cash flow and expenses.

Lavanya Kanchanapalli
Lavanya Kanchanapalli

Partner at LiteFin

 

Leave a Reply