Conversion Of NBFC Into Bank

Package Inclusion :

  • Management Audit of your NBFC
  • Audit of Loan book
  • Review of internal control System
  • Review of Your Software & It Intrastate
  • Filling of application for Conversion of NBFC into bank
  • Advisory on Compliance requirement

Conversion Of NBFC Into Bank

What is Conversion Of NBFC Into Bank?

NBFC have a phenomenal role to play in Indian economy to have sound sources of funding. As said by PN Vasudevan, Bank is like a marriage; NBFC is like a bachelor’s life; you enjoy it and have a lot of freedom but at the end of the day, that’s not life.NBFCs, once they get converted into banks, will get access to lower-cost deposits and improved leverage.

How Bank is different as compared to Non-Banking Finance Company

The Bank and NBFCs function comparable to each other but there are some allowances given to only Banks. i.e following activities can only undergo by Banks

Legal norms for converting NBFC into Bank

While non-banking financial companies (NBFCs) are seen as one of the key contenders to receive the banking regulator's green signal to foray in the banking space but some of them may face a challenge to meet the criteria to convert themselves into a bank.

Following conditions to be fulfilled before Conversion Of NBFC Into Bank

Conversion of NBFCs into private sector banks

NBFC who has good track record wishing to convert into a bank should satisfy the following criteria

Other Requirement to be followed for Conversion Of NBFC Into Bank

Procedure for Application for Conversion Of NBFC Into Bank

Discussion Paper issued by Finance Minister on Entry of new banks in the private sector


Conversion may not be a wise idea as it depends on the business model of individual NBFCs. Thus, considering the long-term strategy NBFC shall go for the conversion.

Despite the threat of increased competition, the impact will be low.NBFCs are presently not of a scale to intimidate existing banks.

In addition, NBFCs will also forego the advantages of operating in an unregulated turf with concentrated exposures. However, Bank will get to enter the markets serviced by NBFCs.

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