A Study of Factors Influencing Customer Choice of NBFC Loans Over Banks

ABSTRACT In recent years, Non-Banking Financial Companies (NBFCs) have emerged as strong competitors to traditional banks in the Indian lending market. Customers increasingly prefer NBFC loans due to faster processing, minimal documentation, flexible eligibility criteria, and personalized services. While banks continue to offer lower interest rates and greater institutional trust, NBFCs have successfully attracted borrowers by focusing on convenience, accessibility, and quick disbursal. The present study aims to analyze the key factors influencing customer choice of NBFC loans over bank loans. The study examines demographic, behavioral, and service-related factors such as loan processing time, documentation requirements, interest rates, customer service quality, and digital accessibility. A descriptive research design is adopted using both primary and secondary data. Primary data is collected through a structured questionnaire, while secondary data is sourced from research journals, RBI reports, and financial publications. The findings of the study provide valuable insights for NBFCs, banks, and policymakers to understand borrower preferences and improve loan products and services in a competitive financial environment. Keywords: NBFCs, Banks, Customer Preference, Loan Services, Financial Institutions, India