Non-Bank

In the financial sector, a "non-bank" refers to any institution or company that offers certain financial services similar to those traditionally provided by banks but does not hold a banking license nor offers the full spectrum of banking services. Non-banks are unable to accept deposits in the traditional sense, which is a key characteristic that distinguishes them from registered banks.

Non-banks play a significant role in the payment system by providing specialized financial services which may include lending, offering credit facilities, payment processing services, and issuing credit cards. Examples of non-bank financial institutions include insurance companies, payday lenders, microloan organizations, and fintech companies that provide innovative financial services like mobile payments, peer-to-peer lending, and personal finance management tools.

One common type of non-bank entity is a company that issues credit cards but does not accept deposits, like some store credit card providers or branded credit cards that are partnered with major retailers but managed by finance companies. These institutions are regulated under financial authority guidelines specific to the services they provide but do not face the comprehensive regulatory scrutiny that applies to traditional banks.

Non-banks are critical in enhancing financial inclusion by offering financial products and services to underserved segments of the population who may not have full access to traditional banking services. They also inject a healthy level of competition into the financial services market, often driving innovation and leading to more diverse and adaptable financial ecosystems.