Getting a loan can be confusing in India because of the loan eligibility differences between banks and NBFCs. In fact, they offer loans mainly to a different group of customers because their requirements, documents, and approval methods are different. Thus, if you know these distinctions, you could easily choose the right lender and not face any delays.
1. Minimum Income Requirements
Banks mostly want people who receive salaries and have a reliable source of income. NBFCs, on the other hand, are more open to different types of income sources and do not mind accepting freelancers, small business owners, and part-time workers.
| Lender Type | Minimum Income Requirement | Notes |
| Banks | ₹25,000–₹30,000 per month | Higher stability expected |
| NBFCs | ₹15,000–₹20,000 per month | Flexible income criteria |
This is one of the major loan eligibility differences. If your income is lower, NBFCs are usually easier to approach.
2. Credit Score Requirements
Financial institutions are very careful about credit history. A CIBIL score over 700 is most of the time necessary. NBFCs could give loans to customers with credit scores under 700.
How Banks Approve Loans
Banks check how banks approve loans, employment stability, income, and past credit behaviour. The process may take longer.
NBFC Loan Eligibility Criteria
NBFCs consider the borrower’s ability to pay back. Hence, their loan eligibility criteria are more liberal, which means that they can grant loans quickly.
3. Documentation Needed
Banks ask for more paperwork, such as salary slips, bank statements, PAN, and employment letters. Less documentation is needed by NBFCs, which is usually just ID, address proof, and income proof.
| Lender Type | Documents Required |
| Banks | Salary slips, bank statements, PAN, employment letter |
| NBFCs | ID proof, address proof, income proof |
This makes NBFC loans simpler and quicker to process. Platforms like Olyv make this process smoother by offering loans online with minimal paperwork and fast approvals.
4. Loan Approval Speed
Banks need a longer time for processing because of thorough verification. Up to 24 hours may be the time taken by some NBFCs to approve loans. This works well if cash is urgently needed. Using digital platforms like Olyv ensures even faster processing and reduces delays.
5. Flexibility and Repayment Options
NBFCs are the ones with Flexible EMIs and prepayment options. Banks only stick to standard timelines. In circumstances where one’s earnings fluctuate, the repayment plans of the NBFCs will be the most suitable, thus leading to easier financial management.
Conclusion
Understanding loan eligibility differences between banks and NBFCs is essential. Banks are best for borrowers with stable, high income and strong credit history. NBFCs are ideal for borrowers needing quicker approvals, lower income thresholds, and simpler documents.
By knowing how banks approve loans, NBFC loan eligibility criteria, minimum income for loans, and documents required for loan approval, you can pick the right lender and reduce stress. Using platforms like Olyv makes the process faster, digital, and more transparent. With careful planning, debt management and loan repayment become easier, saving time and effort.
