Bank vs NBFC for LRD: Which Lender Should You Choose?

Every LRD comes down to a choice no lender will help you make objectively: bank or NBFC? Each sells its own product, so neither will tell you the other might fit your lease better. Here’s the neutral comparison — and why the answer depends on your tenant and lease, not on a blanket rule.

In short: Banks offer the lowest LRD rates but are stricter on tenant quality, lease tenor and documentation and move slower. NBFCs cost a little more but are more flexible on tenant profile, structure and speed. A blue-chip tenant on a long lease usually belongs with a bank; a non-standard tenant, structure or timeline often fits an NBFC better.

Side by side

Indicative (2026) — actual terms depend on the lease, tenant, property and lender.

When a bank is the right call

If your property is leased to a large, well-rated corporate or MNC on a long, registered lease with clean title, a bank will usually offer the lowest rate — and the strength of your file means the stricter requirements aren’t a barrier. For a vanilla, high-quality LRD, the bank route typically wins on cost.

When an NBFC fits better

NBFCs come into their own where a bank hesitates: a mid-tier or unrated tenant, a shorter unexpired lease, a non-standard lease structure, a need for speed, or a desire for a top-up as rent escalates. You pay a little more in rate, but you get the facility — and you can often balance-transfer to a bank later once the lease seasons or the tenant strengthens.

The real answer: run both

The framing of “bank vs NBFC” is slightly misleading — the right move is to put both in competition for your specific file. The same lease can attract very different offers, and the only way to find the best rate-and-terms combination is a competitive process. That’s exactly what an independent advisor does: we’re not a lender, so we run banks and NBFCs against each other and place your file where it gets the biggest loan at the lowest rate. See lease rental discounting, or — if you’re choosing between borrowing against a leased vs an owned asset — our commercial property loan page.

Key takeaways

• Banks = lowest rate, but stricter on tenant/lease/docs and slower.
• NBFCs = more flexible and faster, at a slightly higher rate.
• Blue-chip tenant + long lease → bank; non-standard tenant/lease or speed → NBFC.
• The best outcome comes from running both in competition, not picking one upfront.

FAQ

Is a bank or NBFC better for lease rental discounting? It depends on your lease and tenant. Banks offer the lowest rates but want strong tenants, long leases and full documentation; NBFCs are more flexible and faster at a slightly higher rate. A blue-chip, long-lease property usually suits a bank; a non-standard tenant, lease or timeline often suits an NBFC.

Do NBFCs charge more than banks for LRD? Generally yes — indicatively ~10–12% versus ~8.75–10.5% for banks. The premium buys flexibility on tenant profile, lease structure and speed. If your file is strong, a bank’s lower rate usually wins; if it’s non-standard, an NBFC may be the only practical route.

Can I move my LRD from an NBFC to a bank later? Yes — a balance transfer to a bank once the lease seasons or the tenant strengthens can cut your rate. We net the switching costs against the saving first. See LRD top-up & balance transfer.

How do I find the best LRD lender? Run a competitive process across both banks and NBFCs with a complete, well-framed file. As an independent advisor (not a lender), we put them in competition and place your file where it gets the biggest loan at the lowest rate — see lease rental discounting.