When builders, developers and businesses look for project or construction funding in India, they usually choose between three kinds of lender: banks, non-banking financial companies (NBFCs) and other financial institutions. All three are regulated, and all three fund projects — but they differ in cost, flexibility, speed and the kind of risk they are comfortable with.
Who is who
- Banks — public sector and private scheduled commercial banks regulated by the Reserve Bank of India (RBI). They fund projects largely from customer deposits.
- NBFCs — non-banking financial companies registered with the RBI. They lend but do not take ordinary demand deposits the way banks do, and many specialise in real estate, infrastructure or business lending.
- Financial institutions — other institutional lenders, including specialised institutions that fund particular sectors or larger projects, sometimes alongside banks.
How they typically compare
| Compared on | Banks | NBFCs | Financial institutions |
|---|---|---|---|
| Cost of funds | Generally the lowest | Generally higher than banks | Varies by institution and project |
| Eligibility and norms | Strictest — track record, financials and security | More flexible, case by case | Varies; often focused on specific sectors or larger projects |
| Speed of decision | Can take longer | Often quicker | Varies |
| Structuring flexibility | Standard products | More room to tailor | Can be tailored for larger or specialised projects |
| Stage of funding | Usually once approvals are in place | Can include earlier stages | Depends on the institution |
These are general patterns, not rules — individual lenders differ, and terms depend on the project and promoter.
Why the project's stage matters
Real estate projects need different kinds of money at different times. Under RBI guidelines, banks are generally not permitted to finance pure land acquisition by private builders, and they usually lend once key approvals and registrations are in place. Early-stage requirements are therefore often met by NBFCs or other institutions, while construction finance and project mortgage funding — for example on overdraft (OD) or cash credit (CC) modules — are widely available from banks for eligible projects.
How to choose
Ask these questions before you approach lenders:
- What stage is the project at? Land, approvals, construction or sales — this narrows the field quickly.
- How much do you need, and for how long? Larger tickets may suit banks or a consortium; smaller or shorter needs may suit an NBFC.
- What is your track record? Established promoters with strong financials and completed projects typically qualify for bank funding; newer promoters may find NBFCs more accessible.
- How quickly do you need funds? If timing is critical, speed of decision can matter as much as cost.
- How will funds be drawn? Stage-wise disbursement linked to construction progress is common; make sure the structure matches your cash-flow plan.
Why compare more than one lender
Each lender has its own appetite, norms and pricing. Approaching several lenders separately means repeating documentation and follow-ups each time. An advisor who works with multiple banks, NBFCs and financial institutions can present one well-prepared file to the lenders that fit your project and help you compare offers.
How Biz Corp Solutions helps
We arrange construction finance of ₹5 crore to ₹500 crore and project funding for businesses across Maharashtra, Gujarat and Karnataka. We assess the project, structure the requirement, approach suitable banks, NBFCs and financial institutions, handle the documentation and keep you updated at every stage. Sanction, interest rates and terms are always decided by the lender.