2.4 Non-Banking Financial Institutions (NBFIs)

Meaning: financial intermediaries outside the licensed banking perimeter — not deposit- taking in the current-account sense (or only as licensed specialised lenders), mobilising savings into credit and risk-bearing: the financial system's second ring. Types (with Nepal's instances):1. Finance companies (the 1990s licensees — consumer and hire-purchase finance; the sector's clean-up story);2. Development banks (where classified — project finance);3. Microfinance institutions (wholesale and retail; the poverty-lending ledger's triumphs and the over-lending districts' crisis files);4. Insurance companies (life and non-life; the pooled-risk institutions — the Insurance Act 2079 (2022) as the sector's current statute — cite without sections);5. The contractual savings institutions: the Employees' Provident Fund (the pension contributions' fund) and the Citizen Investment Trust (the unit trusts and retirement schemes) — the long-term capital poolers;6. Cooperatives' financial wing (SACCOs) — the vast member-owned tier;7. The capital market's institutions: the Nepal Stock Exchange (NEPSE, 1993) and its brokers; the Securities Board (SEBON) under the securities legislation — the market's regulator;8. Remittance companies (the licensed money-transfer sector — the pipeline's specialists). Roles: mobilising small and long-horizon savings (the households the banks miss); financial inclusion (the microfinance reach); risk pooling (insurance — the law student's tort-system neighbour: no-fault pools and third-party motor insurance as legal-adjacent case studies); long- term finance for infrastructure (pension funds' patient capital); market depth (the securities market's price discovery); and…