Hence, the question arises what type of financial institution should a loan borrower choose to apply for a personal loan. Banks or NBFC?
Banks and NBFCs both are personal loan lenders. The Banking Companies Act incorporated banks, and the Companies Act of 1956 incorporated the NBFCs. Let us understand how banks and NBFCs both offer instant personal loans and are still different.
|Regulation||Reserve Bank of India||Companies Act|
|Loan Process Time||Stringent||Faster and Quicker|
|Products Offered||Loans, FDs, Demand Deposits, etc||Loans such as Personal loan, Loan Against Property, Home Loans, etc.|
|Benchmark of Interest Rate||Base Rate+Margin||RPLR-Spread|
|Interest rate Benefit For Borrowers||Unlikely||High chance|
As the Reserve Bank of India regulates the banks, they often lay down stringent guidelines for offering loans. The loan borrower needs to have an excellent credit score along with fulfilling other additional eligibility criteria to get a reasonable rate of interest. The pre-payment charges and processing fees are also high
When it comes to finding personal loan companies in India, many NBFCs may come to your attention. As mentioned before, the growth of this market has led to the birth of many NBFCs. NBFCs follow innovative and proprietary techniques to appraise customers more efficiently. Here are a few benefits of applying for a personal loan with an NBFC.
Many NBFCs offer personal loans to applicants who may not have extremely high credit score. However, it is essential to note that if you have a low credit score, then the interest rates will be on a higher scale. When it comes to getting access to funds in times of emergency, NBFCs can be your go-to option as they provide a loan with quick processing time and minimal documentation. If you do not have time on your hand to follow the step-by-step process by banks and need urgent funds, then you can think of applying for a personal loan through and NBFC. Whether you choose a bank or an NBFC, all depends on your requirement and urgency to get funds.