Getting a personal loan no longer means relying only on a traditional bank. Non-Banking Financial Companies (NBFCs) have become another route for accessing unsecured credit, with digital applications, varied eligibility criteria and flexible repayment options. In this blog, we will be exploring how NBFCs work, what they charge and how they differ from banks.
What is an NBFC (Non-Banking Financial Company)?
An NBFC (Non-Banking Financial Company) is a financial organisation that is regulated by the Reserve Bank of India (RBI). They provide services such as personal loans, business loans, investment options, and other forms of credit without operating as a traditional bank. NBFCs are known for online applications, faster processing, and flexible eligibility criteria, making them relevant to applicants who might not meet a bank’s requirements or prefer a more digital borrowing experience.
NBFC vs Bank: What’s Actually Different?
Banks and NBFCs both offer personal loans, but their lending processes and eligibility requirements can differ. Let’s have a look at these defining characteristics.
| Factor | NBFC | Bank |
|---|
| Approval speed | Faster, but depends on the lender and applicant | May involve more processing steps |
| Documentation | May offer flexible documentation | Follows standard documentation requirements |
| Interest rates | Can be higher depending on borrower profile | Often lower for eligible borrowers |
| Branch requirement | Many offer completely digital applications | Online options available, with branch support from many banks |
| Credit assessment | May assess bank transaction history alongside credit scores | Follows established credit and income criteria |
| Existing relationship | May not always be required | Existing customers may sometimes have access to specific offers |
How to Check if an NBFC Is Genuinely Legitimate
Before applying for a personal loan, you need to verify who is actually providing the loan and if it is RBI-regulated. Even if it has a professional-looking website or loan app, that does not support its legitimacy. You can use the following checks to verify the lender.
Check RBI Registration.
When checking the official listing of RBI-registered NBFCs, make sure:
- The legal name matches the name disclosed by the lender.
- The entity's registration details are consistent with the information provided on its website and loan documents.
- The company has not been removed from or had its registration cancelled by the RBI.
Check the Lender's Official Website
If the lender is legitimate, they should generally provide details such as:
- Registered company name: You need to check the legal name behind the lending service.
- Registered office: Check if they have a verifiable physical address.
- Customer-care details: Check if they have official contact channels rather than only a personal phone number or messaging account.
- Loan terms and charges: You need to make sure the interest rate, APR where applicable, processing fees, penalties and other applicable charges are disclosed clearly.
- Privacy policy: RBI's digital-lending guidelines require comprehensive privacy policies that inform applicants how their data is collected and used.
- Grievance redressal: You need to check whether the lender explains how borrowers can raise and escalate complaints.
Red Flags to Watch For
You need to be cautious if you encounter any of the following:
- The claimed lender cannot be found on the relevant RBI list.
- The brand name differs from the lender's legal name.
- The platform promises guaranteed approval, regardless of your credit or financial profile.
- You are asked to make unusual or unexplained payments before receiving the loan.
- Interest rates, APR, fees or other charges are not clearly disclosed.
- The platform pressures you to share sensitive personal or financial information.
- Loan terms are unavailable for review before you proceed.
- The app or website does not clearly identify the actual regulated lender behind the loan.
Loan App vs LSP vs Actual Lender: What's the Difference?
A loan app, LSP and actual lender can play different roles in a digital lending process. Here is a brief overview of their core differences.
| Term | What It Means | What It Does | Is It the Actual Lender? |
|---|
| Loan App | A digital platform where applicants can access loan-related services. | Users can apply for loans, submit documents, and manage repayments. | Not necessarily. It can be operated by an LSP. |
| LSP (Lending Service Provider) | It acts as an agent of a regulated lender, such as an NBFC or bank. | Handles loan applications, customer support, and repayments for the lender. | No. The LSP facilitates lending. |
| Actual Lender | The regulated bank or NBFC that provides the loan. | Assesses and approves the loan while managing the lending relationship. | Yes. This is the entity borrowers should verify before taking a loan. |
NBFC Personal Loans: Interest Rates, Loan Amounts & Tenures
The following NBFCs offer personal-loan products or personal/consumer loans. They are presented in a neutral format rather than ranked, and the information should be rechecked against the lender's latest schedule of charges before publication.
| NBFC | Loan Amount | Interest Rate | Tenure | Processing Fee | Application Mode |
|---|
| Aditya Birla Finance Ltd. | Up to ₹50 lakh | Starting from 10%.99 p.a.* | Up to 84 months | Up to 2.5% of the loan amount | Online |
| Bajaj Finance Ltd. | Up to ₹55 lakh | Starting from 10% p.a.* | Up to 108 months | Up to 4.13% + taxes | Online |
| HDB Financial Services | Up to ₹20 lakh | Starting from 11%. p.a.* | Up to 60 months | Up to 5.90% | Online / Branch |
| Hero FinCorp | Up to ₹7 lakh | Starting from 18% p.a.* | Varies by offer | Minimum 2.5% + GST | Online |
| L&T Finance Limited | Up to ₹30 lakh | Starting from 10.50% p.a.* | 72 months | Up to 4% + applicable taxes | Online |
| Mahindra Finance | Up to ₹15 lakh | Can vary depending on eligibility | Up to 60 months | 2% of loan amount | Online / Branch |
| Shriram Finance | Up to ₹10 lakh | Starting from 11% p.a.* | Up to 60 months | Up to 5% | Online / Branch |
| Tata Capital | Up to ₹35 lakh | Starting from 10.99% p.a.* | Up to 72 months | Up to 5% + GST | Online |
| Piramal Finance | Up to ₹25 lakh | Starting from 12.14% p.a.* | Up to 60 months | Up to 5% + applicable taxes | Online |
| Poonawalla Fincorp | Up to ₹50 lakh | Starting from 9.99% p.a.* | Up to 84 months | Up to 4% + applicable Taxes | Online |
Note: The interest rates, loan amounts, repayment tenures, processing fees and eligibility criteria mentioned above are indicative and may vary by NBFC, loan product and borrower profile. Please check the lender’s official website and loan agreement for the latest applicable terms and charges.
Eligibility Criteria for an NBFC Personal Loan
Eligibility requirements vary between NBFCs, but lenders generally assess factors such as:
- Age: Applicants must fall within the lender's specified age range, which typically ranges from 21 to 60 years.
- Income: A minimum monthly or annual income of Rs. 15,000 may be required.
- Work Experience: Some NBFCs consider employment stability and may require applicants to have a minimum period of work experience.
- Credit Score: Lenders may specify a minimum credit score or use credit history; for example, Bajaj Finance lists a minimum CIBIL score of 650.
- Existing Obligations: Current loans, EMIs and other financial commitments may be considered to assess your repayment ability.
- Residency: Applicants generally need to meet the lender's location or residency requirements.
Documents Required for an NBFC Personal Loan
| Document | Purpose |
|---|
| PAN Card | Used for identity and financial verification. |
| Aadhaar or Other Valid KYC Document | Used to verify identity and address. |
| Address Proof | Confirms the applicant’s current or permanent address. |
| Salary Slips or Income Proof | To know and assess the repayment capacity and income stability of the applicant. |
| Bank Statements | To review income, account activity and repayment capacity. |
| Employment or Business Details | To verify employment or source of income. |
How to Apply for a Personal Loan from an NBFC
Applying for a personal loan from an NBFC varies by lender. Let’s have a look at some common steps an applicant can take while applying to an NBFC.
Step 1: Check Eligibility
- You need to make sure that you meet the NBFC's eligibility requirements, which may include age, income, employment or business status, credit history, existing financial obligations and other lender-specific criteria.
Step 2: Compare Loan Terms
Before applying, compare the key terms offered by different lenders, including:
- Loan amount
- Interest rate
- Repayment tenure
- Processing fee
- Foreclosure or prepayment charges
- Penalty charges and other applicable fees
You need to compare the overall borrowing cost rather than the advertised interest rate. This can help you understand the amount and interest that need to be repaid.
Step 3: Apply Through the Official Channel
- Submit your application through the NBFC's official website, official app or an authorised channel.
- Avoid applying through unverified links or platforms that do not clearly identify the regulated lender.
Step 4: Complete KYC and Verification
- You may submit documents and information for identity, address, income, employment and bank-account verification.
Step 5: Review the Loan Agreement
- Before accepting the loan, carefully check the final agreement, especially the sanctioned amount, interest rate, EMI, tenure, processing fee, other charges and repayment conditions.
Step 6: Receive Disbursal
- Once the lender completes its approval and verification process and all required conditions are met, the approved loan amount is disbursed according to the lender's terms.
Advantages and Limitations of NBFC Personal Loans
| Advantages | Limitations |
|---|
| Digital application options can make borrowing more convenient. | Interest rates may be higher than some bank loan offers. |
| Eligibility criteria may differ from those of traditional banks. | Meeting basic eligibility criteria does not necessarily result in loan approval. |
| Different loan amounts and repayment options may be available. | Loan approval is not guaranteed and depends on lender assessment. |
| Some lenders may use alternative credit-assessment methods. | Borrowers must still assess whether the EMI is affordable. |
How can NoBroker help?
There are several digital platforms that are supported by NBFCs and lending service providers where you can provide an online route to apply for a personal loan, complete KYC and submit the required information without visiting a branch. NoBroker InstaCash offers personal loans ranging from ₹5,000 to ₹10 lakh, with repayment tenures of 3 months to 5 years. The applicable APR ranges from 12.99% to 29.99% p.a., while processing fees may range from 2% to 4%, depending on the applicable terms. If you are an eligible salaried or self-employed applicant, you can apply digitally, and the loan will be disbursed after verification and lender assessment.
NoBroker facilitates NoBroker InstaCash - the loan itself is provided by our lending partners, not NoBroker directly. Read our privacy policy →
Frequently Asked Questions
Q. What is an NBFC personal loan? Ans: An NBFC personal loan is an unsecured loan offered by a non-banking financial company without providing collateral in accordance with the lender's eligibility and approval criteria.
Q. Are NBFCs regulated by the RBI? Ans: Yes. NBFCs carrying out regulated financial activities in India are subject to Reserve Bank of India regulations and applicable registration requirements.
Q. Is an NBFC personal loan different from a bank personal loan? Ans: Both banks and NBFCs offer personal loans, but their eligibility criteria, interest rates, fees, documentation and processing procedures can differ.
Q. What documents are required for an NBFC personal loan? Ans: Commonly requested documents include PAN, Aadhaar or other valid KYC documents, address proof, income proof, bank statements and employment or business-related documents.
Q. Can I get an NBFC personal loan with a low credit score? Ans: Some NBFCs may consider applicants with different credit profiles, but a lower credit score can affect eligibility, interest rates or the loan amount offered.
Q. How do I check whether a loan app is connected to a genuine NBFC? Ans: Verify the lender's legal name and RBI registration, and review the app's privacy policy, fees, grievance-redressal details and other disclosures.
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Ritika is a content writer at NoBroker who writes practical guides on running a home, including paying utility bills, personal loans, household finance, repairs and home improvement. She explains each task in simple steps, with the charges, documents and official links a reader needs.
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