{"id":29839,"date":"2021-05-07T12:42:21","date_gmt":"2021-05-07T07:12:21","guid":{"rendered":"https:\/\/corpbiz.io\/learning\/?p=29839"},"modified":"2021-05-07T12:42:24","modified_gmt":"2021-05-07T07:12:24","slug":"underlining-growth-prospects-for-nbfcs-in-real-estate-realm","status":"publish","type":"post","link":"https:\/\/corpbiz.io\/learning\/underlining-growth-prospects-for-nbfcs-in-real-estate-realm\/","title":{"rendered":"Underlining Growth Prospects for NBFCs in Real Estate Realm"},"content":{"rendered":"\n<p class=\"has-drop-cap\">Owning a house is indeed one of the vital decisions because it involves a lot of costs, including years of saving. Purchasing a property is a kind of investment whose value grows with time, and it offers a sense of security. But, not everyone has adequate financial backup to buy out a property in one go. This is when the requirement for availing of a loan arises. While banks are the one-stop destination for a home loan, they fail to make a sanction in some cases. This is where Non-Banking Financial Companies come into the picture.&nbsp;&nbsp;In this article we will see the growth prospects for <a href=\"https:\/\/corpbiz.io\/nbfc-registration\"><strong>NBFCs<\/strong><\/a> in Real Estate Sector. <\/p>\n\n\n\n<div id=\"ez-toc-container\" class=\"ez-toc-v2_0_82_2 counter-hierarchy ez-toc-counter ez-toc-grey ez-toc-container-direction\">\n<div class=\"ez-toc-title-container\">\n<p class=\"ez-toc-title ez-toc-toggle\" style=\"cursor:pointer\">Page Contents<\/p>\n<span class=\"ez-toc-title-toggle\"><a href=\"#\" class=\"ez-toc-pull-right ez-toc-btn ez-toc-btn-xs ez-toc-btn-default ez-toc-toggle\" aria-label=\"Toggle Table of Content\"><span class=\"ez-toc-js-icon-con\"><span class=\"\"><span class=\"eztoc-hide\" style=\"display:none;\">Toggle<\/span><span class=\"ez-toc-icon-toggle-span\"><svg style=\"fill: #999;color:#999\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" class=\"list-377408\" width=\"20px\" height=\"20px\" viewBox=\"0 0 24 24\" fill=\"none\"><path d=\"M6 6H4v2h2V6zm14 0H8v2h12V6zM4 11h2v2H4v-2zm16 0H8v2h12v-2zM4 16h2v2H4v-2zm16 0H8v2h12v-2z\" fill=\"currentColor\"><\/path><\/svg><svg style=\"fill: #999;color:#999\" class=\"arrow-unsorted-368013\" xmlns=\"http:\/\/www.w3.org\/2000\/svg\" width=\"10px\" height=\"10px\" viewBox=\"0 0 24 24\" version=\"1.2\" baseProfile=\"tiny\"><path d=\"M18.2 9.3l-6.2-6.3-6.2 6.3c-.2.2-.3.4-.3.7s.1.5.3.7c.2.2.4.3.7.3h11c.3 0 .5-.1.7-.3.2-.2.3-.5.3-.7s-.1-.5-.3-.7zM5.8 14.7l6.2 6.3 6.2-6.3c.2-.2.3-.5.3-.7s-.1-.5-.3-.7c-.2-.2-.4-.3-.7-.3h-11c-.3 0-.5.1-.7.3-.2.2-.3.5-.3.7s.1.5.3.7z\"\/><\/svg><\/span><\/span><\/span><\/a><\/span><\/div>\n<nav><ul class='ez-toc-list ez-toc-list-level-1 eztoc-toggle-hide-by-default' ><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-1\" href=\"https:\/\/corpbiz.io\/learning\/underlining-growth-prospects-for-nbfcs-in-real-estate-realm\/#What_is_NBFC\" >What is NBFC?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-2\" href=\"https:\/\/corpbiz.io\/learning\/underlining-growth-prospects-for-nbfcs-in-real-estate-realm\/#Significance_of_Non-Banking_Financial_Companies_in_the_Indian_Economy\" >Significance of Non-Banking Financial Companies in the\nIndian Economy<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-3\" href=\"https:\/\/corpbiz.io\/learning\/underlining-growth-prospects-for-nbfcs-in-real-estate-realm\/#What_is_the_Significance_of_NBFCs_in_Real_Estate_Development\" >What is the Significance of NBFCs in Real Estate\nDevelopment?<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-4\" href=\"https:\/\/corpbiz.io\/learning\/underlining-growth-prospects-for-nbfcs-in-real-estate-realm\/#Real_Estate_Future_and_its_effect_on_NBFCs\" >Real Estate Future and its effect on NBFCs<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-5\" href=\"https:\/\/corpbiz.io\/learning\/underlining-growth-prospects-for-nbfcs-in-real-estate-realm\/#A_take_on_Governments_initiatives_to_steer_NBFCs_through_tough_times\" >A take on Government&#8217;s initiatives to steer NBFCs through\ntough times<\/a><\/li><li class='ez-toc-page-1 ez-toc-heading-level-2'><a class=\"ez-toc-link ez-toc-heading-6\" href=\"https:\/\/corpbiz.io\/learning\/underlining-growth-prospects-for-nbfcs-in-real-estate-realm\/#Conclusion\" >Conclusion<\/a><\/li><\/ul><\/nav><\/div>\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_NBFC\"><\/span>What is NBFC?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>NBFC is a financial avenue that\noffers a wide range of financial and banking services to consumers without\nmeeting the bank&#8217;s legal classification. These establishments come under the\nCompanies Act, 1956. <\/p>\n\n\n\n<p>These institutions&#8217; primary\nfunction is rendering banking services such as the acquisition of shares, as\nthe advancement of loans, credit facilities, securities, retirement plans,\ndebentures, stocks, etc. NBFCs in Real Estate sector play a vital role when it\ncomes to financing prevailing and future project.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Significance_of_Non-Banking_Financial_Companies_in_the_Indian_Economy\"><\/span>Significance of Non-Banking Financial Companies in the\nIndian Economy<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>Non-Banking Financial Companies\nmeet the fiscal needs of a diverse client base that fails to avail the banks&#8217;\nservices.<\/p>\n\n\n\n<p>NBFCs seem identical to banks\nowing to their operating models and overall functionality. Although they don&#8217;t\nfit with the bank&#8217;s legal definition as per law, they are emerging as a\nprominent financial supporter for the needy ones. They usually cater to the\nneed of the unorganized sector and small businesses. These institutions are\nbound to run in accordance with the rules and regulations of other banks.<\/p>\n\n\n\n<p>With a growing demand for property and a large sector consisting of the middle-class, NBFCs have now emerged as a prevalent financial avenue for real estate lending.<\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/possible-traits-of-ideal-nbfc-software\/\">Know the Possible Traits of Ideal NBFC Software<\/a><\/mark><\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"What_is_the_Significance_of_NBFCs_in_Real_Estate_Development\"><\/span>What is the Significance of NBFCs in Real Estate\nDevelopment?<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>NBFC is one of the prominent\ncontributors to the real estate sector of our country. They help in luring\noverseas investment, increase resources&#8217; mobilization and capital formation.\nThis implies that savings can transform into investments, leading to increased\ninvestments in the real estate sector. This implies that demand pertaining to\nreal estate will grow over time, and therefore, property investments can offer\na higher return on investment (ROI) in the future.<\/p>\n\n\n\n<p>Since the fundamental role of\nNBFCs is to finance infrastructural projects, they are one of the biggest\ncontributors to the real estate industry. In the past few years, these\ninstitutions have been sought for real estate loans instead of the banks.<\/p>\n\n\n\n<p>Therefore, they continue to disburse credit to borrowers looking to invest in real estate or housing and are the finest alternative to banks.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Real_Estate_Future_and_its_effect_on_NBFCs\"><\/span>Real Estate Future and its effect on NBFCs<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<div class=\"wp-block-image\"><figure class=\"aligncenter is-resized\"><img decoding=\"async\" src=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/05\/Real-Estate-Future-and-its-effect-on-NBFCs.png\" alt=\"Real Estate Future and its effect on NBFCs\" class=\"wp-image-29861\" width=\"499\" height=\"607\" srcset=\"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/05\/Real-Estate-Future-and-its-effect-on-NBFCs.png 822w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/05\/Real-Estate-Future-and-its-effect-on-NBFCs-247x300.png 247w, https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2021\/05\/Real-Estate-Future-and-its-effect-on-NBFCs-768x934.png 768w\" sizes=\"(max-width: 499px) 100vw, 499px\" \/><\/figure><\/div>\n\n\n\n<ul><li>By 2040, the real estate market is expected to grow to 65,000 crores from Rs. 12,000 crores in 2019. The real estate sector is anticipated to attain a market size of US$ 1 trillion by 2030 and contribute 13% to the nation&#8217;s GDP by 2025. Commercial real estate, hospitality, and Retail are thriving considerably, given the rising infrastructure demand. Indian real estate shall be increased by 19.5% CAGR by 2028.&nbsp; These figures are nothing short of potential growth indicator for NBFCs in real estate sector. <\/li><li>The sectors such as IT, manufacturing, and consulting largely depend on office space to execute their operations. During 2019, the office leasing space hit an all-time high record, posting 60.6 million square feet (msf) across eight major cities, recording a growth of 27% on year on year basis. <\/li><li>Warehousing space grew 247 million square feet (msf) in 2020\nand witness investment worth Rs. 50,000 crore during FY 2018-20. Grade \u2013A\noffice space demand is likely to reach 700 msf by 2022, with NCR contributing\nthe most.&nbsp;&nbsp;<\/li><li>2.61 lakh units of the house were sold in 2019 across seven\nmajor cities. Home sales volume in eight major cities collectively reached\n33,403 units in Sep 2020 compared to 9,632 units in the preceding quarter,\nindicating healthy recovery after the lockdown imposed due to the spread of\nCOVID-19. <\/li><\/ul>\n\n\n\n<p><strong>Facts to be noted<\/strong><\/p>\n\n\n\n<p>With limited funding from\nconventional banks, which came down to 2% as of March 2018, NBFCs stood at\n61%&nbsp; of commercial borrowing in the nation. Given the ever-increasing\npopulation, there has been a consistent demand for the need of infrastructures\nsuch as commercial spaces and offices. The borrowing had increased up to 50% in\nthe FY 2016 \u2013 2018. Unfortunately, in the year 2020, the overall lending in\nIndia reduced by 46% owing to the Coronavirus outbreak.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"A_take_on_Governments_initiatives_to_steer_NBFCs_through_tough_times\"><\/span>A take on Government&#8217;s initiatives to steer NBFCs through\ntough times<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The RBI has taken some critical decisions in the past to improve the efficiency and security of NBFCs in <em><strong>India<\/strong><\/em><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/India\"><em><strong>[1]<\/strong><\/em><\/a><\/sup>. In 2018, the Reserve Bank came up with an Information Technology Framework for NBFC to augment security, safety, and efficiency to ensure seamless operation and improved turnaround time.<\/p>\n\n\n\n<p>The Role of NBFCs in capital formation &amp; sustaining consumptions in  <a href=\"https:\/\/corpbiz.io\/msme-registration\"><strong>MSMEs <\/strong><\/a>is quite significant. Therefore, the <em><strong>Government of India<\/strong><\/em><sup><a href=\"https:\/\/en.wikipedia.org\/wiki\/Government_of_India\"><em><strong>[1]<\/strong><\/em><\/a><\/sup> has facilitated a single-use partial credit guarantee to PSBs to purchase high-rated assets worth Rs 10, 00, 00 crores from NBFCs. This initiative was of great help because it allows NBFCs to garner much-needed liquidity to support their operation. <\/p>\n\n\n\n<p>Even when most private lenders\nand NBFCs were encountering tough times amid the COVID-19 era, the government\nstands strong and releases much-needed financial support to these firms through\ndifferent initiatives. The schemes like Partial Credit Guarantee Scheme and\nSpecial Liquidity Scheme collectively provide Rs 75,000 crores of financial support\nso that these institutions can effectively counter the unprecedented liquidity\ncrunch.&nbsp;<\/p>\n\n\n\n<h2 class=\"wp-block-heading\"><span class=\"ez-toc-section\" id=\"Conclusion\"><\/span>Conclusion<span class=\"ez-toc-section-end\"><\/span><\/h2>\n\n\n\n<p>The presence of NBFCs in our country ensures trouble-free accessibility of finances to the more significant part of the unbanked population. The absence of banking status doesn\u2019t make them unreliable or unproductive and they are as precise as any full-fledged bank. As far as their growth is concerned in real estate realm, it is expected that as the economy stabilizes overtime, these institutions will see the improved credit demand. The increasing significance of NBFCs in Real Estate sector will pave down roadmap of growth for Indian economy. <\/p>\n\n\n\n<p class=\"text-left\"><b>Read our article<\/b>:<mark style=\"background: #fffd03 !important;\"><a href=\"https:\/\/corpbiz.io\/learning\/rbi-proposed-to-revamp-nbfcs-regulatory-framework\/\">RBI Proposed to Revamp NBFCs Regulatory Framework<\/a><\/mark><\/p>\n\n\n\n<p><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Owning a house is indeed one of the vital decisions because it involves a lot of costs, including years of saving. Purchasing a property is a kind of investment whose value grows with time, and it offers a sense of security. But, not everyone has adequate financial backup to buy out a property in one [&hellip;]<\/p>\n","protected":false},"author":22,"featured_media":29860,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":[],"categories":[91],"tags":[1721],"acf":{"service_id":"8"},"authorName":"Pankaj Tyagi","authorImageUrl":"https:\/\/corpbiz.io\/learning\/wp-content\/uploads\/2022\/01\/MicrosoftTeams-image-42.jpg","authorDescription":"Pankaj has a diverse experience of writing research papers, blog, and articles during his college time. Earlier, he was working as a tax consultant in a financial firm, but his interest in writing drives him to pursue a career in the writing field.","postViews":3756,"readingTime":4,"_links":{"self":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/29839"}],"collection":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/users\/22"}],"replies":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/comments?post=29839"}],"version-history":[{"count":23,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/29839\/revisions"}],"predecessor-version":[{"id":29865,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/posts\/29839\/revisions\/29865"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media\/29860"}],"wp:attachment":[{"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/media?parent=29839"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/categories?post=29839"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/corpbiz.io\/learning\/wp-json\/wp\/v2\/tags?post=29839"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}