Borrowing from an NBFC? 5 Risks You Must Know
A new NBFC called Nivasa Capital just got RBI approval to give home loans. More NBFCs means more loan options — but borrowing from an NBFC works very differently from a bank, and many Indians don't know the key risks.
India has 9,500+ NBFCs — more than all bank branches in Mumbai combined.
NBFC deposits have zero government insurance — your money is unprotected
Key Takeaways
Check RBI's official NBFC register at rbi.org.in before taking any loan — verify the lender is genuinely licensed.
Compare total interest cost (APR, not just EMI) between bank and NBFC offers before signing any loan agreement.
Avoid paying any upfront processing fee to an NBFC before loan disbursal — this is a common fraud red flag.
A new NBFC called Nivasa Capital just got RBI approval to give home loans. More NBFCs means more loan options — but borrowing from an NBFC works very differently from a bank, and many Indians don't know the key risks.
Here's what happened: Nivasa Capital received RBI's NBFC licence to offer secured mortgage loans, targeting borrowers rejected by traditional banks.. India now has thousands of RBI-registered NBFCs offering personal, home, and business loans at varying interest rates.. Unlike banks, NBFCs cannot accept savings deposits and are not covered under RBI's ₹5 lakh DICGC deposit insurance scheme..
What you should do: Check RBI's official NBFC register at rbi.org.in before taking any loan — verify the lender is genuinely licensed.. Compare total interest cost (APR, not just EMI) between bank and NBFC offers before signing any loan agreement.. Avoid paying any upfront processing fee to an NBFC before loan disbursal — this is a common fraud red flag..
NBFCs can legally charge higher interest than banks — always ask for the annualised percentage rate (APR) in writing, not just the flat monthly rate shown in ads.
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