Why you should consider NBFCs over banks for personal loans

Nov 29, 2021
 |  1 min read

Even until a decade ago, if you were planning to get a loan, your options were limited to the public and private sectors, and informal lenders. But over the past few years, non-banking finance companies (NBFC) have changed things around considerably.

What're the differences between banks and NBFCs?

Both private and public sector banks are regulated by the Reserve Bank of India (RBI). NBFCs, while also registered with the RBI, falls under the purview of the Companies Act of 1956. 

Banks follow a stringent loan approval process while NBFCs veer more towards leniency. Also, banks and NBFCs have different personal loan interest rate benchmarking systems.

While bank interest rates rely on the vagaries of RBI policy rates and market forces, NBFCs have control over interest rates charged to customers because of internal benchmarking.

Benefits of NBFC

Speedy approval and disbursal

NBFCs can get a loan approved within a matter of minutes, and the quicker approval means faster disbursal of the amount.

Risk assessment is automatic

The underwriting process is significantly faster in NBFCs, thanks to automated technology, which in turn has increased the speed of the application process. Also, this process lowers operating costs, which allows the NBFCs to give you a more competitive offer than bank loan interest rates.

Strong security system

NBFCs use highly advanced security technology to ensure that their customers' sensitive data is safe.

Superior data utilisation

NBFCs do not base their decision to lend you money solely on your credit score but numerous other data points are also considered when scanning your loan application.

More inclusive

For many customers that have been refused loans by banks and other institutions, NBFCs are lifesavers. They've been able to meet a variety of financial demands of such customers. Even business owners, to might've struggled to get a loan from a conventional bank, are able to get it from NBFCs.

Unique offerings

Customers these days have far more unique loan requirements than in the past. Just take, for example, the many startups that are taking off each day. In that regard, NBFC loans offer diverse options to meet these unique financial requirements, which has helped the healthy growth of the lending market.

Why consider NBFCs over banks for loans?

End to End Online Application Process

With just a few details, customers can complete the loan application process online.


Customers can receive loan approval within a few minutes after applying with an NBFC for a personal loan.

Faster Processing

While the traditional loan process takes up to a few days, if not weeks, NBFCs can process a loan application within just 24 hours post-approval. Thus, you can count on them for your urgent needs.

Lower Interest Rates

Since NBFCs' base interest rates are on the basis of prime lending rate, which is not regulated by the RBI, they offer higher flexibility and more competitive rates of interest.

Top-quality customer service

NBFCs generally customer service that's far superior to banks. It's more personalised and heavier on attention to detail.

Eligibility Criteria

NBFCs have eligibility criteria that are not too hard to satisfy, which serves to extend their range to more customers. Having a low credit score isn't usually a big issue either since NBFCs consider other aspects than just your repayment capacity.

Minimum Documentation

NBFCs require minimum documents to process the loan, unlike banks where customers are bogged down with exhaustive paperwork.

All these advantages apply for mPokket, which is an NBFC. When you take loans using the mPokket instant loan app, be it an education loan, a service loan, or a salary advance loan, timely repayments improve your CIBIL score, which will help you be eligible for larger loans and even improve your employment prospects.

That's why, If you are seeking an instant student loan or salaried loan and wondering where to turn for some quick credit, Simply download the mPokket online loan app, register by uploading a handful of documents, and post the online loan approval, borrow instant personal loans of up to Rs. 45,000. mPokket instant loans for salaried and loans for students online are both credited straight to your bank account.

You might also like: What are the different types of Instant Loans?

Gaurav Jalan

Gaurav Jalan is the Founder and CEO of mPokket, a digital lending platform serving underserved Indian youth. He leverages technology and experience to deliver cost-effective credit to marginalized populations. In his role, he provides strategic direction and oversees execution to fulfill mPokket's mission.