Which Type of NBFC Is Right for Your Business Model?

Non-Banking Financial Companies (NBFCs) play a major role in supporting businesses and individuals with financial services that are not provided by traditional banks. Whether you want to provide loans, manage digital payments, offer peer-to-peer lending, or aggregate financial data, there is an NBFC model for you.

In this blog, we will help you understand different types of NBFCs and how to choose the right one based on your business goals. We will also explain how to get NBFC Registration with RBI and apply for specific licenses such as NBFC Account Aggregator License Online, PPI License, and P2P Lending License Online.

What is an NBFC?

An NBFC is a company registered under the Companies Act, which provides financial services similar to banks but does not hold a banking license. It is regulated by the Reserve Bank of India (RBI) and must follow certain rules and regulations. NBFCs can offer loans, asset financing, investments, insurance, and more.

Why Choose an NBFC for Your Business?

NBFCs allow more flexibility in operations than traditional banks. They are easier to set up and focus on niche markets such as small businesses, low-income individuals, digital lending, and financial technology (fintech) services. If you are an entrepreneur or a startup in the financial sector, an NBFC can be a smart way to start your operations.

Key Types of NBFCs in India

There are several types of NBFCs, each serving a unique business purpose. Here are the main types:

1. NBFC – Investment and Credit Company (NBFC-ICC)

This is the most common type. It offers loans and advances, asset finance, and investment in securities.
Best for: Businesses that want to offer personal loans, business loans, or vehicle finance.

2. NBFC – Micro Finance Institution (NBFC-MFI)

These provide small loans to low-income groups, especially in rural and semi-urban areas.
Best for: NGOs or startups targeting financial inclusion.

3. NBFC – Factors

They offer factoring services, which means purchasing and managing the receivables of businesses.
Best for: Companies helping small enterprises with cash flow management.

4. NBFC – Infrastructure Finance Company (NBFC-IFC)

These NBFCs provide long-term finance for infrastructure projects like roads, airports, or energy.
Best for: Companies focused on large-scale infrastructure development.

5. NBFC – Housing Finance Company (NBFC-HFC)

These provide housing loans and are regulated by the National Housing Bank (NHB).
Best for: Real estate developers or companies offering home loans.

6. NBFC – Account Aggregator (NBFC-AA)

They help customers access all their financial data in one place by collecting and sharing it with financial service providers (with customer consent).
Best for: Fintech companies working in financial data analytics or personal finance platforms.
Read more: NBFC Account Aggregator License Online

7. NBFC – Peer-to-Peer Lending Platform (NBFC-P2P)

These connect borrowers directly with lenders through a digital platform. They do not lend their own funds but provide a marketplace.
Best for: Startups in digital lending or alternative finance.
Read more: P2P Lending License Online

8. NBFC – Prepaid Payment Instrument Issuer (NBFC-PPI)

These issue digital wallets and prepaid cards that can be used for payments.
Best for: Businesses offering payment solutions or e-wallets.
Read more: PPI License Apply Online

How to Choose the Right Type of NBFC?

Here are a few questions to help you decide: